Crude turns lower on profit-taking, supported by demand hopes

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Crude halted a two day rally on Tuesday, shrugging off some positive signals as traders took profits following strong gains on Monday.

Brent futures closed at $109.99 on Monday, the highest close in nearly two weeks, due in part to positive economic data from China and the United States, the world's two largest energy consumers. But momentum stalled on Tuesday as Brent balked above the key $110 mark, traders said.

U.S. crude, meanwhile, was largely unchanged as traders awaited a weekly inventory report that was expected to show a drop in U.S. crude stocks, signaling healthy consumption as the summer driving season gets under way.

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Brent was down 60 cents near $109 a barrel after its biggest daily percentage advance in nearly two months on Monday. U.S. crude ended down 6 cents to settle at $104.35 a barrel. It had ended up 1.7 percent on Monday, its biggest daily gain since April.

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The expected decline in U.S. crude stockpiles of 1.5 million barrels, according to a Reuters poll, follows data last week showing employment returned to its pre-recession peak, the latest in a string of positive U.S. economic indicators. The American Petroleum Institute will release its inventory data later on Tuesday followed by data from the Energy Information Administration on Wednesday.

The oil market kept an eye on producer group the Organization of the Petroleum Exporting Countries (OPEC), which meets in Vienna on Wednesday to decide oil output targets. The cartel, which pumps a third of the world's oil, has said it is happy with global oil prices and is expected to maintain its production target at 30 million bpd.

--By Reuters. For more on commodities prices, please click here.