Benchmark oil for July delivery fell 42 cents to $95.35 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 26 cents on Monday.

Investors have been trying to guess the timetable for the U.S. Federal Reserve to wind down its massive bond-buying program. The $85 billion-a-month asset purchases, which help put pressure on interest rates, have been a boon to stock and commodities markets, where investors have turned in search of returns that outdo bonds.

Stan Shamu, a market strategist at IG Markets, said the chances that the Fed might taper off purchases might be considered higher after Standard & Poor's Ratings Services upgraded its outlook Monday for the U.S. government's long-term debt. That could hurt stock and oil prices.

"This restored the notion that the Fed will be looking to taper off soon enough as conditions seem better," said Shamu in an email commentary.

Meanwhile, OPEC maintained its forecasts for global oil demand unchanged. In its monthly report, it said demand is still forecast to increase by 800,000 barrels per day in 2013. It said consumption will continue growing in emerging economies in Asia and Latin America and fall in developed countries.

Traders will later in the day look to the U.S. Energy Department's own monthly report, while the International Energy Agency, an umbrella group for the world's oil consuming nations, gives its update Wednesday. The U.S. Energy Department also comes out with its weekly report on oil and fuel supplies.

Elsewhere, Brent crude, a benchmark for many international oil varieties, fell 58 cents to $103.37 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

'€” Wholesale gasoline fell 1.8 cents at $2.8304 a gallon.

'€” Heating oil fell 0.7 cents at $2.8772 per gallon.

'€” Natural gas rose 2.5 cents to $3.7750 per 1,000 cubic feet.

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