US oil prices dive on massive sale rumors

The New York market shrugged off the minutes of the Federal Reserve's January monetary policy meeting showing divisions continued over its asset purchases programs to support the weak economy.

A barrel of West Texas Intermediate for March fell $2.20 from Tuesday to close at $94.46 on the New York Mercantile Exchange.

A barrel of European oil benchmark Brent futures settled at $115.60 in London, down $1.92.

Analysts were left searching for explanations after oil prices suddenly fell $3 in the New York session.

Kyle Cooper, managing partner at the Houston, Texas-based consultancy IAF Advisers, said sudden shifts in prices sometimes surface when the front-month futures contract expires, as was the case with the expiration of the March WTI oil futures contract.

"At expiration, funds need to get out," Cooper said.

Analyst Stephen Schork said there was no news involving fundamental supply and demand factors behind the price movement.

"There was "some sort of massive amount of selling pressure (that) came into the market," said Stephen Schork, an analyst at the Schork Group. "As to what the catalyst is, that's anyone's guess."

Schork said possible explanations included the chance of a so-called "fat finger," a term for an errant trade, or the decision by a fund to suddenly unload contracts.

One factor that could have resulted in downward pressure was news that oil-producer Iran was resuming negotiations with UN Security Council members Britain, China, France, Russia and the United States, plus Germany, said Cooper.

The six countries will make Iran an offer with "significant new elements" in a bid to resolve the dispute over its nuclear program at talks next week in Kazakhstan, a Western diplomat said.

The Federal Reserve's minutes of its January Federal Open Market Committee meeting revealed debate about the bank's $85 asset-purchase programs.

Bill Baruch of iiTrader said the oil market was "already down" before the minutes were released and that they had little impact on oil prices.