Oil shed over 30 cents to near $78.50 on Wednesday as investors fretted over signs of weakness in any global recovery and waited for U.S. figures later for clearer indications on crude inventories and imports.
Attention across all markets was also focused on U.S. Federal Reserve Chairman Ben Bernanke's testimony to the United States Congress later on Wednesday for any signals on the economy's health and the prospect of interest rate rises.
U.S. crude for April was down 32 cents to $78.54 a barrel by 1153 GMT, while London ICE Brent was down 36 cents at $76.89. U.S. crude touched a low of $78.25 while Brent dipped at one point to $76.63.
The U.S. inventory report this afternoon is the most important factor for the oil market today, said Carsten Fritsch at Commerzbank.
Will those figures show imports rising as much as in the API report -- 1.2 million barrels is really massive, he added.
On Tuesday, the American Petroleum Institute (API) said crude oil imports rose 1.2 million barrels per day (bpd) to 9.19 million bpd, while inventories fell 3.1 million barrels and refinery runs rose marginally to 80.8 percent of capacity.
The U.S. Energy Information Administration will release inventory figures for the week to February 19 later on Wednesday.
Fritsch said the impact of a stronger dollar was also important for oil and other commodities.
The dollar held broad gains after weak U.S. consumer confidence data the previous day limited risk appetite, and as investors braced for Bernanke's testimony.
The euro continued to be under pressure from concerns about Greece's public finances and the strength of global recovery.
With governments desperately trying to find exit routes ... consumers are supposed to take over the baton. If they are reluctant it falls on the shoulders of business ... and they are unlikely or unable to take investment risk in the face of sluggish consumer demand and bank lending at record lows, brokers PVM said in a note.
Figures showed Germany's economy stalled in the fourth quarter of 2009 and a slide in U.S. consumer confidence to a 10-month low stoked doubts about the pace of global recovery.
Much will ride on what the dollar will do, and more importantly, how markets take ... Bernanke's testimony, MF Global Energy wrote in a note.
Uncertainty over leadership in oil exporter Nigeria added to market concerns as President Umaru Yar'Adua arrived back in Abuja after three months in a Saudi Arabian hospital.
In France, workers at Total's French refineries were voting on a possible return to work which could bring the plants be back onstream after securing pledges from the company not to shut plants other than Dunkirk before 2011.
(Additional reporting by Alejandro Barbajosa in Singapore; editing by James Jukwey)