Oil drops 1.5 percent; gains could be tapering off

Benchmark oil dropped $1.45, or 1.5 percent, to finish at $95.23 per barrel, the first decline of more than 1 percent since Dec. 21.

Even before the price sank in the afternoon, traders were questioning whether recent gains in oil had run their course. As of Tuesday's close, the price of oil had risen more than $10 a barrel since Dec. 13.

One catalyst for the recent price increase has been the apparent strengthening of the global economy. But the International Monetary Fund dampened that optimism when it projected only modest global economic growth in 2013, while warning that “there remain considerable challenges ahead.”

Some oil analysts raised the caution flag as well.

“The approximate 12 percent crude advance extending back to early December has priced in a very optimistic global economic view,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

The price of oil began to fall in the early afternoon after reports surfaced that the Seaway pipeline, which takes crude from Cushing, Okla., to the Gulf Coast, was constrained and could only work at about half its 400,000 barrel-per-day capacity, according to Andrew Lebow, an analyst at Jefferies Bache. That will likely mean growing supplies at Cushing, the trading hub for U.S. benchmark oil, and lower prices.