US benchmark West Texas Intermediate fell 14 cents to $53.39 while Brent fell 13 cents to $62.40 in late-morning trade.
“Traders are book-squaring in the likely case that the US stockpiles report shows deficiencies,” said Ric Spooner, market analyst at CMC Markets in Sydney.
The US Department of Energy will release its weekly stockpiles report on Thursday, a day later than usual because of a US holiday on Monday, with analysts expecting an increase.
Last week’s report showed that US crude inventories already reached their highest levels on record for this time of the year.
Rising crude stockpiles indicate softer demand in the world’s biggest economy and top oil consuming nation and is a dampener on prices amid a supply glut.
Spooner also said that traders are keeping an eye on developments in North African crude oil producer Libya.
Analysts said that infighting and sabotage in Libya has reduced output to 150,000 barrels a day, down from a high of almost 1.5 million barrels per day.
Egypt on Tuesday called for UN-backed international intervention in Libya after launching air strikes on Islamic State targets there in retaliation to the jihadist group’s beheading of Egyptian Christians.
Egyptian President Abdel Fattah al-Sisi said “there is no choice” but to create a global coalition to confront the extremists in Libya. -AFP