"I think it's just a very technical sell off after Brent hit $122 which is the highest level since August 2008," said Serene Lim, oil and gas analyst for ANZ bank in Singapore. She added that crude oil traders were looking to the ECB meeting on Thursday, where a hike in the central bank's interest rates was widely expected to be announced.
"The tone of the ECB on further rate hikes may be supportive of the euro and that will be supportive of oil prices," Lim told AFP. An ECB rate increase would push up oil prices as a stronger European currency would make US dollar-priced crude more attractive, perking up demand. However, there are also other factors affecting oil trading, including concerns over unrest in the Middle East and North Africa which could disrupt oil supplies coming from the region.