Oil slid for a second day on Thursday, a day after Fed chief Ben Bernanke rekindled unease across financial markets over the pace of economic recovery, while rising U.S. inventories also kept prices in check.
Bernanke's comment that the prospects for the U.S. economy were unusually uncertain in testimony to lawmakers on Wednesday sent crude prices back down to the middle of a tight trading range of less than $5 over the past two weeks, after touching a July peak above $78.50 a barrel earlier in the day.
U.S. crude for September declined as much as 40 cents to $76.16 and was down 23 cents at $76.33 by 0647 GMT (2:47 a.m. EDT), while ICE Brent shed 22 cents to $75.15.
Unusual uncertainty means the market cannot have solid confidence of economic recovery, said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan.
Bernanke faces another round of testimony on the economy to U.S. lawmakers on Thursday.
Asian stocks slipped and the yen rose on Thursday ahead of European bank stress tests. The results of the European Union examination of banks are due on Friday and are expected to show generally positive results for Greece, Italy and Ireland and a few failures in Portugal and Spain.
The crude oil market is waiting to go higher to $80, $85 and $90, but it still needs time, Hasegawa said. Everyone understands that the (U.S.) inventory level is relatively high. That is one of the bearish factors that may be capping it down.
U.S. crude stockpiles rose 360,000 barrels in the week to July 16, government statistics from the Energy Information Administration showed on Wednesday, against a forecast for a drop of 1.4 million barrels.
Rising crude imports helped offset an increase in refinery capacity utilization. Higher refinery use boosted gasoline inventories 1.1 million barrels, more than a forecast gain of 900,000 barrels. Distillate stocks jumped up 3.9 million barrels, more than double the expected rise.
Shell Oil Co (RDSa.L) began pulling nonessential workers from eastern Gulf of Mexico oil and natural gas operations on Wednesday due to the threat of a possible tropical storm that may emerge by the weekend, the company said.
But an updated forecast that cut the chances of a storm developing also dampened crude prices.
The U.S. National Hurricane Center said on Thursday a weather system hovering over the Bahamas, eastern Cuba and Hispaniola had a 40 percent chance of becoming a tropical cyclone in the next two days, down from as high as 70 percent on Wednesday.
Storms in the region can follow a westward path toward the oil-rich Gulf of Mexico.
It is possible that some supply disruption due to a hurricane would be a supportive factor, Hasegawa said.
(Editing by Ed Lane)