Oil reversed earlier gains to fall below $76 a barrel on Thursday after falls in U.S. equities and weak macroeconomic data curbed expectations for future demand growth in the world's largest oil consumer.

By 1416 GMT front-month U.S. crude was trading down $1.50 at $75.54 a barrel, after earlier jumping to $77.66. ICE Brent was down $1.25 at $75.52 a barrel.

Eugen Weinberg of Commerzbank said the oil markets are being driven by sentiment and macro indicators, rather than the demand and supply of oil.

By 1349 GMT the S&P 500 was down more than 1 per cent on the day at 1,081.52.

The sudden fall in oil prices reversed earlier rises, that had gained further traction on the 1315 GMT news that US industrial output had beaten consensus forecasts by eking out a 0.1 per cent month on month rise.

But they later extended losses after factory growth in the U.S. Mid-Atlantic region fell unexpectedly this month.

News during Asian trading that China's economic growth cooled to 10.3 percent in the second quarter in a slowdown that is likely to extend over the rest of the year, continued to exert countervailing downward pressure on prices.

The doubling of oil prices from the late 2008 trough below $40 a barrel is widely attributed to improving fuel demand led by Asia, as the global economy pulls out of recession.

Anything seen as a risk to this narrative, such as the latest macroeconomic data out of China, tends to dampen sentiment in the oil market.

Earlier this week, oil prices looked set to breach a critical technical resistance level -- the 200-day moving average near $78.50 a barrel -- in a move that some thought would take oil into a new trading range straddling $80 a barrel.

But signs of weaker growth have since doused sentiment and technical analysts now see oil trading in a tight band between $76-$78 a barrel before pulling back to the low $70s.

Stocks data from the U.S. Energy Information Administration on Wednesday were widely viewed as neutral for the oil market.

A near 5 million barrel drop in crude oil was countered by larger-than-expected product builds as refiners boosted rates above 90 percent.

(Additional reporting by Alejandro Barbajosa in Singapore; editing by Alison Birrane)