Oil slipped below $71 a barrel on Thursday in volatile trade as investors weighed signs of slightly better demand against concerns over the fragility of any economic recovery.
U.S. crude fell 38 cents to $70.65 a barrel by 1335 GMT (9:35 a.m. EDT), and Brent crude fell 50 cents to $70.35 a barrel.
Mixed economic data out of the United States, the world's largest energy consumer, clouded the view as investors tried to gauge whether the rally which has seen oil prices more than double since February still has further to run.
The number of U.S. workers filing new claims for jobless benefits rose last week, but the number of people staying on the benefits rolls fell for the first time since January, data showed on Thursday.
The macroeconomic data is still very mixed -- we are still in a recession, even if the worst of it is well behind us now, Barclays Capital analyst Amrita Sen said.
We're witnessing a period of consolidation in the low $70s at the moment, but the fundamental data we're seeing on oil is starting to turn quite quickly, with inventories of crude in the U.S. now coming down.
Oil prices took some support after Royal Dutch Shell
Chinese oil data showed diesel exports fell to 390,000 tonnes in May from 510,000 tonnes in April, as oil firms kept more fuel at home on rising demand and falling stockpiles.
The Chinese customs data came as the World Bank raised its forecast for gross domestic product growth this year for the world's third-largest economy to 7.2 percent from the 6.5 percent projected in its previous quarterly report in March.
Growing demand for oil from emerging economies like China and India was one of the main reasons prices spiked to record highs near $150 a barrel last July, before the economic crisis crimped consumption across the globe, sending prices crashing.
Demand is certainly lower than last year but there are tentative signs of improvement, analyst Andrey Kryuchenkov at VTB Capital in London said.
Traders were also watching moves in the U.S. dollar, as the greenback slid toward $1.40 against the euro, but rose against the yen.
Weakness in the dollar often boosts commodities priced in U.S. unit as they become cheaper for holders of other currencies.
(Additional reporting by Chua Baizhen in Singapore; Editing by William Hardy)