Oil prices fell 2 percent on Tuesday as doubts resurfaced over the pace of economic recovery after U.S. data showed another drop in wholesale business inventories.
Oil followed Wall Street stock prices lower after the U.S. Commerce Department reported that U.S. wholesale inventories plummeted 1.7 percent in June, and investors worried that businesses were running as lean as possible because of doubts about an economic recovery.
The decline, nearly double analyst expectations and the 10th straight monthly drop, pushed inventories to their lowest level in more than two years.
U.S. crude fell $1.43 to $69.17 a barrel by 1210 p.m. EDT. <.N> London Brent crude dropped $1.07 to $72.43 a barrel.
I think the market will continue to test resistance and support levels in the recent range until further evidence surfaces that addresses the alleged recovery's sustainability, said Mike Fitzpatrick, vice president at MF Global in New York.
Optimism that a turnaround in the economy could bolster weak energy demand has helped oil prices recover in the months since crude dropped below $33 a barrel in December.
The Organization of the Petroleum Exporting Countries forecast the slow recovery in global consumption and rival oil supplies will shrink demand for its crude next year.
In light of weakening fundamentals, the sustainability of current prices will mainly depend on clearer signs of improvement in the global economy, OPEC's economists said in a report.
Prices rose earlier on news crude imports to No. 2 consumer China had surged by 42 percent in July to a record 4.62 million barrels per day gave oil prices a lift.
Traders were also awaiting weekly American Petroleum Institute inventory data late on Tuesday, followed by weekly U.S. government data on Wednesday.
Analysts polled by Reuters forecast the weekly data will show a build in crude oil inventories and a drop in gasoline and crude stocks in the week to August 7.
(Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons in New York; Emma Farge, Maryelle Demongeot and David Sheppard in London; Editing by David Gregorio)