By Scott DiSavino

Brent futures fell 36 cents, or 0.6 percent, to settle at $61.14 a barrel, while the most active U.S. West Texas Intermediate (WTI) crude contract for March fell 39 cents, or 0.7 percent, to settle at $52.62.

France's foreign minister said he expected a European-backed system to facilitate non-dollar trade with Iran and bypass fresh U.S. curbs imposed after Washington quit a landmark nuclear deal, would be established in coming days.

Peter Cardillo, chief market economist at Spartan Capital Securities in New York said that EU announcement "knocked the wind out of oil prices."

Analysts also said falling U.S. gasoline prices and rising crude output in the United States were also pressuring the crude market.

"We are paying particular attention to weakening NYMEX crack spreads where an increasingly heavy gasoline market is providing a limiter on near term WTI gains," Jim Ritterbusch, president of Ritterbusch and Associates in Chicago, said in a report.

The crack or spread between U.S. gasoline futures and WTI crude on the New York Mercantile Exchange (NYMEX) fell to $5.97 a barrel, its lowest since 2013.

Market participants said they were looking ahead to the U.S. weekly petroleum inventories report, which was expected to show crude stocks holding steady, while gasoline inventories were forecast to build for the eighth straight week. [EIA/S]

The weekly report from the American Petroleum Institute (API), an industry group, is due at 4:30 p.m. (2130 GMT) and data from the Energy Information Administration (EIA) will be released on Thursday. Both reports were delayed a day due to the U.S. Martin Luther King Jr holiday on Monday.

The EIA said on Tuesday it expected shale output to rise to a record high in February. For graphic on U.S. oil production growth, click https://tmsnrt.rs/2AZSnDc

U.S. CONSIDERS VENEZUELA SANCTIONS

The Trump administration ratcheted up pressure on Venezuela's President Nicolas Maduro on Wednesday, announcing U.S. recognition of the country's opposition leader as interim president and signalling potential new sanctions against its vital oil sector.

Potential U.S. sanctions on Venezuela's crude oil exports, however, would hit U.S. refiners that are its biggest customers, as the OPEC nation would likely be forced to send more crude to China, India or other Asian countries, traders said.

The U.S. share of Venezuelan exports has fallen in recent years with more shipments going to Russia and China, largely through oil-for-debt repayment structures.

"It would make a tight market even tighter. If it happens, it would be an unambiguous headwind for (U.S.) refiners already struggling to find supplies," said Bob McNally, president of Rapidan Energy Group, an energy consultancy in Bethesda, Maryland.

(Additional reporting by Sinead Carew in New York, Noah Browning in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Alexandra Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)