Oil fell below $64 a barrel on Tuesday, as the dollar edged off six-week lows and on lingering skepticism over the pace of the global economic rebound.
The market will turn to the release of weekly U.S. inventory data at 2030 GMT to gauge whether talk of economic recovery is translating into real demand in the world's top energy consumer.
Federal Reserve Chairman Ben Bernanke's semi-annual testimony on the U.S. economic outlook and monetary policy at 1400 GMT will also provide more trading cues.
U.S. crude oil for August delivery, which expires later on Tuesday, fell 43 cents to $63.55 a barrel by 0700 GMT (3 a.m. ET), after settling up 42 cents at $63.98 on Monday. London Brent crude for September fell 73 cents to $65.71.
The market is see-sawing based on people's perception of the U.S. economy -- they don't really know if the recovery is durable, and they are trading based on available data that offers clues on the outlook, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
But short-term fundamentals do not look strong because inventories remain high, so we're going to be stuck in the $60s to $70s range for a while, he added.
U.S. weekly crude stockpiles are forecast to have fallen by 1.8 million barrels in the week to July 17, marking the seventh straight week of decline, as slow imports countered a decline in refining activity, a Reuters poll of 10 analysts showed.
The API, an industry group, will release its data at 2030 GMT, while the U.S. Energy Information Administration (EIA) will unveil its own report the following day at 1430 GMT.
Demand could be recovering in the world's second-largest oil consumer, evidenced by a slower decline in Sinopec Corp's second quarter fuel sales.
Domestic sales of refined oil products by the top refiner in Asia declined 4.8 percent from a year earlier to about 31.28 million tons in the past three months, a Reuters calculation showed, compared with a 12.4-percent drop in the first quarter.
Asian stocks edged up to a 10-month peak on Tuesday on strong company earnings, prompting a further shift into riskier assets from the safe-haven dollar, which edged off six-week lows against the euro struck the previous day.
Federal Reserve Chairman Ben Bernanke will speak on the economic outlook and monetary policy before the House Financial Services Committee at 1400 GMT, and some analysts expect he is likely to make clear there is no rush to tighten.
Bernanke, writing in the Wall Street Journal ahead of his testimony, said accommodative policies would likely be warranted for an extended period, but the Fed would need to tighten policy to prevent inflation as economic recovery takes hold.
(Editing by Michael Urquhart)