Oil prices fell on Wednesday after a U.S. government report showed a surprise increase in gasoline supplies in the world's top consumer heading into summer driving season.
U.S. gasoline stocks rose by 3.4 million barrels last week, according to data from the U.S. Energy Information Administration, defying expectations for a decline and easing worries about supplies as Americans gear up for summer holiday road trips.
The number was large enough to allay supply concerns for now, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
U.S. crude for July traded down 38 cents to $70.09 a barrel by 1:16 p.m. EDT, having earlier fallen as low as $69.00 a barrel. Brent crude for August fell 26 cents to $69.98 a barrel.
U.S. gasoline futures fell 6 cents to $2.0111 a gallon after the EIA report.
Oil's losses were tempered by a steep 3.9 million barrels decline in crude inventories, according to the EIA report.
There was a larger-than-expected draw in crude inventories, but the market is headed lower, and I think that's a result of product inventories building, especially gasoline, said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.
U.S. crude oil inventories remained about 19 percent higher than a year ago, with demand weak during the recession.
Oil last week hit a 2009 high above $73, lifted by hopes for an economic recovery that could boost fuel demand.
Slumping consumption sent oil off record peaks over $147 a barrel hit last July, prompting the Organization of the Petroleum Exporting Countries last year to agree to a series of production cuts to prop up prices.
Qatari Oil Minister Abdullah al-Attiyah said price gains in recent months were due to speculators more than fundamentals, and the producer group was unlikely to increase output soon.
We believe that there is not fundamentals in the price. We believe (those) who move the market today, (are) merely speculators. We see their strong influence in the commodities market, he said.
U.S. President Barack Obama on Wednesday laid out his vision for reshaping U.S. financial regulation, including imposing regulation on over-the-counter derivatives.
The dollar weakened against the euro and yen as an unexpectedly small rise in U.S. inflation strengthened expectations that the Federal Reserve will keep interest rates low for some time.
The Nasdaq rose more than 1 percent as investors snapped up technology shares after a two-day sell-off, while both the Dow and the S&P 500 clung to modest gains as healthcare shares advanced. <.N>
(Reporting by Richard Valdmanis, Matthew Robinson, Gene Ramos and Robert Gibbons in New York; Joe Brock and Alex Lawler in London; Editing by David Gregorio)