Oil eased to below $71 a barrel on Friday after two days of gains sparked by worries of low fuel supplies from creaking U.S. refineries and an upsurge of violence in the Middle East.
A weekly U.S. report on Wednesday showed gasoline stocks failed to build up and heating oil inventories fell. That sparked concern U.S. refiners, running at 89 percent of capacity, would be unable to make enough fuel.
"We're having a little setback today but it's nothing to speak of," said Christopher Bellew, senior vice president, Bache Commodities. "Gasoline is very strong because refinery runs are at 89 percent and stocks are below average."
Brent crude , now more representative of the global market, was off 55 cents at $70.81 a barrel by 1033 GMT, while U.S. crude eased 34 cents to $67.31.
Markets were rattled further after Hamas Islamist fighters took control of Gaza after six days of civil war.
Dealers weighed the potential of a wider conflict drawing in neighboring Middle East states that pump a quarter of the world's oil.
Tension was already high over supply disruptions in Nigeria, Iran's atomic program and low supplies of gasoline in top consumer the United States.
U.S. gasoline stocks were running about 6 percent below a year ago following a prolonged stretch of refinery outages, while heating oil inventories slumped to levels one-third below last year.
"Both markets are very bullish," said Makoto Takeda, of Tokyo's Bansei Securities.
(Reuters, 15/06/2007)