Light, sweet crude, for March delivery, fell $US2.02 to settle at $US63.09 a barrel on the New York Mercantile Exchange.
March Brent crude fell $US1.77 to $61.56 a barrel on London's ICE Futures exchange.
PVM Oil Associates in Vienna believe the US weekly inventory data will show petrol supplies rose by 1.6 million barrels and crude oil supplies rose by 860,000 barrels.
The information puts crude stocks about 9 per cent higher than last year.
Also pressuring the high prices, is the US Energy Department’s revision of global demand, in the first quarter, to 85 million barrels a day - 300,000 barrels a day lower than predicted a month ago.
"Clearly, the market is fundamentally overpriced, and in front of the impending numbers tomorrow, you had tremendous profit-taking," said Steve Bellino, a senior vice president at Energy Risk Management.
"The market looks like it's broken down a bit," he added.
Iran supplies
The sense on the market was that overall energy supplies are ample, and fears of disruptions to the Iranian oil supply, because of possible UN sanctions on the country, took a back seat.
"Basically, some easing of the tension vis a vis the Iran situation helped to take some of the worries out of the market in term of potential supply disruption from that country," John Kilduff, analyst at Fimat USA said.
Mr Kilduff said in recent weeks that the market has been driven by geopolitical worries.
"It's quite easy for the prices to fall precipitously once any of those worries lessen," he noted.
But he said traders were not ruling out a crisis over Iran.
"You still have to be quite worried about the Iran situation worsening and worsening quickly and causing prices to go back up," he said.
The United Nations nuclear watchdog, the IAEA, voted Saturday to refer Iran to the Security Council over its nuclear programme.
Iran – OPEC’s the second biggest oil producer - had earlier threatened to cut its oil exports in retaliation.
It exports some 2.7 million barrels of crude per day.
Ecuador Oil suspended
But while Iran’s oil is still flowing Ecuador, the fifth largest oil producer in Latin America has temporarily stopped production.
State owned oil company, Petroecuador, has suspended its exports after hundreds of protesters stormed a pumping station demanding the government suspend trade talks with the United States.
The pipeline moves all of Petroecuador's production.
Petroecuador declared force majeure, freeing it from its contractual obligations, until the dispute could be resolved, which according to a company spokesman could last a couple of days.
"Force majeure" is a standard clause in commercial contracts that frees parties from their obligations if forces outside their control intervene, such as an earthquakes, hurricanes or labour protests.
"Force majeure was declared due the fact that we have few stocks to attend to our clients and the domestic market," the spokesman said.
OPEC output lowest Feb '05
OPEC oil output in January fell to its lowest level since February 2005 as maintenance cut production from the United Arab Emirates and militant attacks hit Nigerian exports, a Reuters’ survey showed.
Output from the Organization of the Petroleum Exporting Countries fell 190,000 barrels per day (bpd) in January from December to 29.54 million bpd, according to the survey of consultants, shippers, oil industry and OPEC sources.
Maintenance at Murban, the largest oilfield in the UAE, cut exports by 150,000 barrels per day.
Exports at Murban are expected to recover in February.
Militant attacks on oil infrastructure in Nigeria cut exports by a net total of around 30,000 bpd.