Oil eased below $71 a barrel on Wednesday after inventory data showed a rise in United States fuel stocks, adding to doubts about demand from the world's biggest energy consumer.
U.S. light, sweet crude fell 46 cents to $70.96 a barrel by 5:16 a.m. EDT, giving away some of the gains that helped the market gain 13 percent since late last week.
London Brent crude fell 30 cents to $73.96 a barrel.
The U.S. Energy Information Administration (EIA) was due to release crude inventory data later on Wednesday with the market eager for further guidance after Tuesday's numbers from the American Petroleum Institute.
The API data showed crude stocks fell 1.5 million barrels last week but gasoline stocks rose by a further 2.1 million barrels, during what is traditionally the peak fuel usage season in the United States.
According to EIA data last week, gasoline stocks are up 5.3 million barrels from a year ago.
A Reuters poll of analysts forecast an 800,000-barrel build in crude stocks in the week to July 31. The poll also predicted a 1.2-million barrel rise in distillate stocks and a 1.0-million barrel drop in gasoline stocks.
I think the API statistics were weak. A slight drop in crude doesn't mean it is supportive. If you look at gasoline data it is very weak considering the time of year. Traders will be waiting for confirmation from DOE (EIA) later, said Christophe Barret, global oil analyst at Calyon.
The oil market was awaiting news from a meeting between trade representatives and Britain's financial powers, the UK Financial Services Authority (FSA) and the UK Treasury, which comes before a third Commodity Futures Trading Commission (CFTC) hearing in Washington over how to rein in speculation.
The UK meeting will discuss market transparency and efficiency, according to the FSA invitation to oil market participants, a copy of which has been seen by Reuters.
Optimism that a potential turnaround in the global economy could lift sagging oil demand has helped send crude up from lows below $33 a barrel in December, with energy traders keeping an eye on equities markets for signs of an economic rebound.
European shares were largely unchanged on Wednesday after Japan's Nikkei average <.N225> and Hong Kong's Hang Seng index <.HSI> both ended down over 1 percent, with investors taking profits after the index set a 10-month closing high the previous day.
Energy traders also were watching an area of thunderstorms in the Atlantic Ocean several hundred miles southwest of the Cape Verde Islands associated with a tropical wave. The U.S. National Hurricane Center said it had less than a 30 percent chance of becoming a tropical storm.
(Editing by Sue Thomas)