Oil fell below $77 a barrel in Asian trade today after recent sharp gains as demand concerns and a stronger dollar weighed on the market.
New York's main futures contract, light sweet crude for delivery in March, was down 43 cents to $76.90 a barrel.
Brent North Sea crude for April delivery declined 31 cents to $75.96 a barrel.
Analysts said prices were impacted by the American Petroleum Institute's oil inventory report yesterday indicating a weakness in US demand.
The report showed a surprise rise in middle distillate stocks of heating oil and diesel.
"The API data showed a build-up in middle distillates and that's really the market that everybody had been looking at," said Jason Feer, vice president and general manager of energy market analysts Argus Media.
Stocks of middle distillates in the week ended February 12 rose by 1.28 million barrels, confounding expectations that the commodity would see a decline of 1.6 million barrels.
Analysts said prices were also being pressured by a stronger dollar, which makes greenback-priced crude more expensive for buyers using weaker currencies thus dampening demand.
The euro was languishing in Asian trade today as investors remained nervous about Europe's economic outlook in light of Greece's debt problems, dealers said.