Oil Prices Drop Below $63, Gas Futures Slip

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The retreat came ahead of the release of U.S. figures later in the day expected to show a rise in oil stocks but declines in gasoline and heating oil supplies.

Light, sweet crude for April delivery on the New York Mercantile Exchange dropped 37 cents to $62.73 a barrel in electronic trading by midday in Europe. Gasoline futures fell by nearly 2 cents to $1.8485 a gallon.

Heating oil futures slid more than 2 cents to $1.7957 a gallon.

On the ICE Futures exchange in London, Brent crude slipped 26 cents to $63.71.

On Tuesday, gasoline futures rose 12.27 cents to $1.866 a gallon on the Nymex. Brokers said the rally was sparked after Amerada Hess Corp. said that over the weekend it unexpectedly shut a gasoline producing unit at a refinery in St. Croix that it co-owns with Petroleos de Venezuela SA. The company said repairs to the unit, which refines roughly 150,000 barrels of crude per day, could take up to two weeks.

Refiners are also approaching the turnaround season when they shut down their plants to perform maintenance ahead of summer, which is traditionally the busiest period for gasoline production. It often causes supplies to tighten and prices to rise.

Vienna's PVM Oil Associates forecast that gasoline stocks would fall by 1.3 million barrels due to declining imports, distillate stocks would decline by 1.6 barrels and crude would rise by 2.3 million barrels. The weekly snapshot is produced by the U.S. Department of Energy's statistical arm, the Energy Information Administration.

On Tuesday, the International Energy Agency, a watchdog for the world's energy consumers, lowered its 2006 oil demand estimate by 290,000 barrels per day. The IEA attributed the lessened forecast demand to persistently high fuel prices and slowing consumption in Southeast Asia.

Unrest in Nigeria and the possibility of U.N. sanctions against Iran, the No. 2 producer within OPEC, for its nuclear ambitions continue to support prices.