LONDON: Oil eased to below $77 a barrel on Wednesday, falling from a two-week high, after a weekly industry report showed a surprise increase in US crude inventories and European equities turned lower.
US crude stockpiles rose by 1.7 million barrels, the American Petroleum Institute reported on Tuesday.
European stocks fell after gaining in the previous six sessions.
US crude fell 35 cents to $76.80 a barrel at 1028 GMT. It reached a two-week intraday high of $77.37 on Tuesday. Brent crude was down 18 cents to $76.47.
"From a fundamental point of view, another leg down is more likely than a strong price increase," said Eugen Weinberg, analyst at Commerzbank in Frankfurt.
Traders will be looking to the weekly supply report from the US government’s Energy Information Administration due at 1430 GMT to see if the inventory build reported by the API is confirmed.
Inventories have risen in other industrialized countries. The International Energy Agency on Tuesday said stocks in OECD nations rose in May to equal 61 days of demand, up from 60.3 days at the end of April.
Bank shares lost ground in Europe on Wednesday on concern about stringent rules for the sector, but US stock index futures pointed to a higher open for Wall Street.
Oil and US equities have become more closely correlated this month. Investors often see the strength of equities as an indication of wider economic health and future demand for oil and energy.
Oil in New York was just below its 200-day moving average at $77.39, a level analysts who study past price moves to predict direction said needed to be breached for prices to rally further.
"The line to conquer for the bulls today will be the resistance of the 200-day moving average," said Olivier Jakob of Petromatrix.
"We continue to believe that sustainability above $80 will be difficult until (there is) a true visible change in the fundamental data." —Additional reporting by Alejandro Barbajosa.
