Oil falls as U.S. summer gasoline fears ease

U.S. gasoline stocks rose by 3.4 million barrels last week, according to data from the U.S. Energy Information Administration, defying expectations for a decline and easing worries about supplies as Americans gear up for summer holiday road trips.

"The number was large enough to allay supply concerns for now," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

U.S. crude for July traded down 38 cents to $70.09 a barrel by 1:16 p.m. EDT, having earlier fallen as low as $69.00 a barrel. Brent crude for August fell 26 cents to $69.98 a barrel.

U.S. gasoline futures fell 6 cents to $2.0111 a gallon after the EIA report.

Oil's losses were tempered by a steep 3.9 million barrels decline in crude inventories, according to the EIA report.

"There was a larger-than-expected draw in crude inventories, but the market is headed lower, and I think that's a result of product inventories building, especially gasoline," said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

U.S. crude oil inventories remained about 19 percent higher than a year ago, with demand weak during the recession.

Oil last week hit a 2009 high above $73, lifted by hopes for an economic recovery that could boost fuel demand.

Slumping consumption sent oil off record peaks over $147 a barrel hit last July, prompting the Organization of the Petroleum Exporting Countries last year to agree to a series of production cuts to prop up prices.