On Tuesday, Brent crude futures slipped after being weighed down by demand growth concerns in Europe after Moody's downgraded six countries in Europe. However, Brent crude prices held above $117 per barrel on fears of a supply disruption.

Ratings agency Moody's warned it may cut the top ratings of Britain, Austria, and France after downgrading Italy, Portugal, and a few other countries, weighing down Asian shares and the euro.

By 0655 GMT, Brent March crude fell 63 cents to $117.30 a barrel to reverse all the gains made in the previous session. U.S. crude fell 30 cents to $100.61 a barrel.

"At a time when the oil market has had rallies for several weeks, it's probably a little bit of short-term nervousness of being caught on the wrong side," said Ric Spooner, chief markets analyst at CMC Markets, referring to a sell-off by traders after the Moody's downgrade.

"Worries remain on the supply of crude in the Middle East, which should be built into Brent," said Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo. "The worsening of the situation in Iran or Syria could cause a shift in Brent prices."

Reuters market analyst Wang Tao said U.S. oil will rise to $102.06 per barrel as it has cleared a resistance at $100.25, while Brent will retrace further to $116.29.