Oil fell today on fresh evidence of growing global oversupply and as investors awaited the outcome of a US Federal Reserve meeting where interest rates are likely to be raised, boosting the dollar and pressuring commodities.
Brent was down $1.08 cents at $37.37 today, after closing 53 cents higher at $38.45 a barrel yesterday to mark its first gain in eight days.
Analysts are watching for any test of Brent's December 2008 low of $36.20, with a break below that level taking the benchmark to levels not seen since 2004.
West Texas Intermediate crude futures was down 29 cents at $37.06 per barrel after rising more than $1 yesterday.
The overwhelmingly bearish sentiment that has pushed oil from above $115 per barrel last June returned to the fore as fresh evidence emerged that low prices are doing nothing to ease heavy oversupply.
Data last night from industry group the American Petroleum Institute showed a surprise rise of 2.3 million barrels in US crude stockpiles last week.
A Reuters poll of analysts had forecast a fall of 1.4 million barrels.
Inventory data from the US Energy Information Administration is due later today. Investors are also positioned for a rise in interest rates which would support the dollar.
This makes oil, which is priced in dollars, more expensive to holders of other currencies.
Markets are already prepared for a 25 basis point increase but will be closely watching the Fed's policy statement for indications of where rates will go next year.
In the latest Reuters poll of over 90 economists, taken between December 4-9, the probability that the Fed will raise rates from near zero rose to 90% from 70%.