Brent North Sea crude for April delivery fell 34 cents to $61.06 per barrel in London late afternoon deals, having earlier touched a two-month peak on upbeat Kuwaiti comments.
US benchmark West Texas Intermediate (WTI) for April sank $1.08 to $51.70 a barrel.
“Oil prices dropped back on Tuesday with traders unwilling to hold onto oil futures going into (this week’s US) oil inventory report,” said CMC Markets analyst Jasper Lawler.
“Oil stocks are widely expected to see another build. The reduced rig count so far has not been enough to reduce US oil production.”
The US government’s Department of Energy will publish its weekly crude inventories report on Thursday, one day later than normal owing to a national holiday on Monday.
Earlier on Tuesday, crude futures had risen on upbeat comments from key producer Kuwait, while investors kept tabs on Greece’s troubled debt talks with its creditors.
“The Kuwaiti oil minister is optimistic that the gains will hold and prices will drift higher in the second half of the year,” said PVM analyst David Hufton in a note to clients.
“There are reasonable grounds to believe that he is right,” he added.
Kuwaiti Oil Minister Ali al-Omair said oil prices have recovered “faster” than expected and recent gains will likely hold.
“I think it will last… It started holding gains now and hopefully, in the second part of 2015, we will see better prices,” Omair told reporters Monday.
Kuwait, a member of the Organization of Petroleum Exporting Countries (OPEC) cartel, is the world’s 10th largest petroleum producer.
Crude has been on a rollercoaster for the past two weeks after prices fell by around 60 percent between June and January.
Losses accelerated in November after OPEC decided to maintain its production at 30 million barrels per day.
In recent weeks, market sentiment has been bolstered by cuts in output by North American shale producers that have raised expectations of a reduction in the current supply glut.
Elsewhere on Tuesday, European ministers raised the pressure on Greece to accept a last-minute debt deal as the radical leftist government in Athens remained defiant refusing “blackmail” from Brussels.
Europe and Greece are racing to come to an agreement and avoid a catastrophic Greek exit from the eurozone, after talks ended bitterly on Monday with both sides digging into their position. -AFP
