The price of oil eased back to below $96 a barrel today, a day after hitting a five-week high on the back of solid US economic data, which raised hopes of the pace of recovery in the world's largest economy.
Benchmark oil for May delivery was down 40 cents to $95.94 a barrel in electronic trading on the New York Mercantile Exchange.
The Nymex contract added $1.53 yesterday to finish at the five-week high of $96.34 a barrel following strong durable goods orders figures from the government and a stronger-than anticipated rise in the Standard & Poor's/Case-Shiller 20-city price index.
Brent crude was up five cents to $109.41 a barrel on the ICE Futures exchange in London.
Though the US economy is providing support to oil prices, analysts say it is too soon to forget about the debt crisis in Europe, especially after the recent events involving Cyprus.
The country teetered on the brink of bankruptcy until a deal was reached earlier this week to provide it some €10 billion from international lenders. The deal, however, requires Cyprus to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks.
The uncertainty in Cyprus has heaped particular pressure on the euro, which makes crude oil priced in dollars a less enticing investment for traders using currencies other than the dollar. Oil traders will also be watching for the release of fresh data on US stockpiles of crude and refined products.
Data for the week ending March 22 is expected to show a build of 1.6 million barrels in crude oil stocks and a draw of 1.6 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill.
The American Petroleum Institute said yesterday that crude stockpiles rose by 3.7 million barrels last week, while the report from the Energy Department's Energy Information Administration - the market benchmark - will be out later today.