Oil fell toward $71 on Thursday, after touching 10-month highs earlier this week, as swollen crude and distillate inventories in the United States, the world's largest fuel consumer, weighed on sentiment.
U.S. crude for October fell 32 cents to $71.11 a barrel by 1157 GMT (7:57 a.m. EDT) after falling for two consecutive days. Brent crude lost 30 cents to $71.35 a barrel.
Investors were reaping profits after prices touched $75 a barrel on Tuesday, having risen nearly 130 percent since lows last December.
It seems that most markets are floundering here, as investors are perhaps taking some money off the table after weeks of steady gains, MF Global analyst Edward Meir said in a research note.
Data from the Energy Information Administration (EIA) on Wednesday showed that U.S. crude inventories rose by 200,000 barrels last week, confounding analysts' expectations for a 1.1 million barrel decline.
This confirmed in part the bearish trend shown by the American Petroleum Institute (API) which showed a 4.3 million barrel rise in crude stocks on Tuesday.
Stocks of middle distillates, which include diesel and heating oil, rose by 800,000 barrels to total 162.4 million barrels last week, up over 30 million barrels against last year, and topping projections of a 300,000-barrel build.
European shares fell 0.2 percent in early trade, extending early losses.
German consumer sentiment rose to its highest level in 15 months in August but this had had little impact on prices.
Analysts said oil prices were likely to trade in a wide range between $70 and $75 a barrel in the absence of fresh bullish impetus.
The market would need a strong reason to break $75, said Petromatrix analyst Olivier Jakob. It would need continuous support from equities and the dollar and further support from the statistics.
Investors will eye U.S. jobless data due at 1230 GMT for signs that a global economic recovery could be underway.
Oil has also not received much support from the 2009 Atlantic hurricane season.
Tropical Storm Danny, the fourth for this year, posed no foreseeable threat to the Gulf of Mexico oil area and was expected to stay well out to sea for the next few days, the U.S. National Hurricane Center said.
(Editing by William Hardy)