Oil prices seesawed on Wednesday as the market awaited a meeting of OPEC exporters that may increase global production and weekly data on U.S. crude and fuel stockpiles delivered a mixed picture.
Benchmark Brent crude was down 55 cents to $74.53 a barrel by 2:29 p.m. ET, falling from a session high of $75.86 in volatile trade.
U.S. light crude was up 80 cents a barrel, or 1.2 percent, at $65.70. The contract bounced back and forth between a session low of $65.01 and a peak of $66.53.
Looming large over markets are meetings on June 22-23 in Vienna of the Organization of the Petroleum Exporting Countries with other big producers, including Russia.
Saudi Arabia, as well as Russia are pushing to loosen supply controls introduced in 2017 to prop up prices. Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.
"Unlike previous meetings, the run up to this OPEC meeting is fraught with uncertainty with Iran from the onset adopting a very entrenched opposition to any supply increase," Harry Tchilinguirian, head of global oil strategy at French bank BNP Paribas, told the Reuters Global Oil Forum.
Iran said on Tuesday OPEC was unlikely to reach a deal. But on Wednesday, Iranian Oil Minister Bijan Zanganeh said OPEC members that had overdelivered on cuts in recent months should return to compliance with agreed quotas.
That would effectively mean a modest boost from producers such as Saudi Arabia that have been cutting more deeply than planned despite production outages in Venezuela and Libya.
"OPEC could keep the same deal with compliance going back to 100 percent," said an OPEC source who is aware of Iran's stance.
Technical analysts say prices are unpredictable.
"The market is now stuck in an OPEC-wary condition. It is likely to be thrown around by headlines and over enthusiastic participation is not advised," said Robin Bieber, director of London brokerage PVM Oil Associates.
Jack Allardyce, oil and gas research analyst at Cantor Fitzgerald Europe, said he expected OPEC would agree to pump more oil, probably a fairly modest 300,000-600,000 bpd, or only around 0.5 percent of total world production.
"We could see this knocking $5 per barrel off Brent," Allardyce said.
U.S. crude inventories fell by 5.9 million barrels in the week to June 15, according to the U.S. Energy Information Administration. That exceeded the 3-million-barrels drop reported by the American Petroleum Institute on Tuesday.
Offsetting the decline, gasoline stockpiles rose by 3.3 million barrels, while inventories of distille fuel, which includes diesel and home heating fuel, jumped by 2.7 million barrels, EIA reported. Implied demand for both fuel types weakened by more than 550,000 barrels per day.
Traders said a drop in Libyan supplies due to the collapse of an estimated 400,000-barrel storage tank also helped push up prices.
Markets are also anxiously watching trade tensions between the United States and China, in which both sides have threatened to impose stiff duties on each other's exports, including U.S. crude oil.
A 25 percent tariff on U.S. crude oil imports, as threatened by China in retaliation for duties Washington has announced but not yet implemented against Chinese products, would make American crude uncompetitive in China versus other supplies.
This would almost certainly lead to a sharp drop-off in Chinese purchases of U.S. crude, which have boomed in the last two years to a business now worth around $1 billion per month.
The United States exported nearly 2.4 million bpd of crude oil last week, EIA reported, near an all-time high set last month.
— CNBC's Tom DiChristopher contributed to this report.