Benchmark crude for September delivery was down 44 cents to $68.75 a barrel by noon in European electronic trading on the New York Mercantile Exchange. On Tuesday, the contract gained $2.44 to settle at $69.19.
Most European and Asian stock markets dropped sharply Wednesday, with Shanghai's index tumbling as much as 5 percent, amid concerns the recent rally had caused stocks be overvalued.
Crude has snaked around $70 a barrel for about two months amid low summer trading volume. Investors are cheered by signs that the global economy is emerging from recession, but concerned the recovery may be sluggish.
Still, expectations are of a low upward curve in the immediate future.
"Crude prices should increase steadily, albeit at a slow rate, over the next 12 months," wrote Vienna's JBC Energy.
Oil rose as high as $70.50 a barrel Wednesday before turning down, following a sharp drop in most major Asian stock indexes.
Meanwhile, Kuwait's oil minister said there is no need for the Organization of Petroleum Exporting Countries to change production levels because crude is trading at acceptable prices.
Sheik Ahmed Al Abdullah Al Sabah told reporters in Kuwait on Wednesday that current prices are "not bad, not bad at all."
U.S. crude demand has been weak so far this summer, but inventories unexpectedly fell last week, evidence consumption could be rebounding.
Inventories plunged 6.1 million barrels last week, the American Petroleum Institute said late Tuesday. Analysts expected the API numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The Energy Department reports mandatory supply figures on Wednesday, while the API numbers are reported by refiners voluntarily.
In other Nymex trading, gasoline for September delivery fell more than 2 cents to $1.98 a gallon and heating oil dropped by just under 2 pennies to $1.85. Natural gas for September delivery slid by over 2 cents to $3.05 per 1,000 cubic feet.
In London, Brent prices fell 57 cents to $71.80 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy contributed to this report from Singapore.
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