Oil prices fell toward $77 a barrel on Wednesday as the dollar strengthened and Wall Street slipped on worries about domestic bank results and bank lending curbs in China.
U.S. crude contract for February delivery, expiring Wednesday, fell $1.93 to $77.09 a barrel by 12:06 p.m. EST (1706 GMT). March crude fell $1.88 to $77.44. In London, Brent crude for March delivery fell $1.60 to $76.03 a barrel.
U.S. equities fell on Wednesday as quarterly results from three big U.S. banks raised concerns about the stability of the sector. <.N> New U.S. housing starts unexpectedly fell in December, while U.S. producer prices rose 0.2 percent last month.
Investors have looked to wider data over the past year for signs of economic recovery and a potential rebound in energy demand.
The petroleum markets continue to take much of their guidance from the financial markets, with both the retreat in the equity markets and the firmer U.S. dollar prompting short-term traders to sell petroleum, said Tim Evans, energy analyst at Citi Futures Perspective in New York.
Book squaring on front-month February crude ahead of expiry was contributing to the day's volatility, Evans added.
The euro fell to fresh five month lows against the dollar on Wednesday as markets worried about Greece's public finances. Over the past year, oil prices have frequently weakened as the dollar firmed, at times signaling a flight to safer havens by investors.
We're starting to see the commodity trade come off, mostly on the stronger dollar, said market analyst Michael Hewson at CMC Markets in London.
Chinese banking authorities instructed some major banks to stop new lending for the rest of January, after loan growth surged in the first few weeks of the year, official media and banking sources said on Wednesday.
Last week China raised bank reserve requirements for the first time since June 2008.
China's plans to tighten credit markets continue to cause concern, meaning that the release of GDP and other economic data tomorrow will have to be very bullish to offset this, said David Wech, head of energy studies at JBC Energy in Vienna.
China's December economic indicators will be published late on Wednesday. Analysts say Chinese industrial production probably grew at its fastest pace in almost four years, jumping by 20 percent in the year to December, compared with a reading of 19.2 percent in November.
Separately, U.S. crude inventories likely rose for a third straight week as imports increased and refinery utilization fell with the start of the maintenance season, a preliminary Reuters poll of analysts showed.
U.S. inventory reports were expected from the American Petroleum Institute later on Wednesday and from the Energy Information Administration on Thursday.
U.S. crude stockpiles were expected to have gained 2.5 million barrels on average in the week ended January 15, a survey of eight analysts showed.
Distillate stocks were projected up 400,000 barrels, with heating oil demand expected to have fallen amid moderating winter temperatures in the U.S. Northeast. Gasoline stocks probably rose 1.9 million barrels.
The country's refinery utilization was forecast to have fallen 0.3 percentage point to 81 percent of capacity.
Some U.S. refineries have begun their first-quarter maintenance, with the goal of retooling for gasoline production ahead of the summer driving season.
(Additional reporting by Gene Ramos in New York, Chris Baldwin in London and Alejandro Barbajosa in Singapore; Editing by Walter Bagley)