Crude oil for September delivery fell 65 cents to $68.54 a barrel in electronic trading on Globex. Prices relinquished some gains as the oil market continues "to take its cue from equity markets, which are weaker today and the dollar, which has strengthened," said Nimit Khamar, analyst at Sucden Financial Research. "Despite yesterday's gains, market participants are increasingly concerned with the strength and the sustainability of an economic recovery at the moment," Khamar wrote in a note to clients. Should these concerns intensify, crude prices will become more vulnerable to a sell-off toward $60 a barrel, he said. Oil futures rallied 3.6% on Tuesday, as the U.S. dollar fell against most of its rivals, and as Wall Street stocks posted gains, buoying sentiment in the energy market after two days of declines. See full story. U.S. stock index futures fell Wednesday, pointing to a lower open for Wall Street following another in a recent string of sharp drops by Chinese shares. China's top stock markets suffered steep declines, with the Shanghai Composite Index falling 4.3% and the Shenzhen Composite Index ending down 4.9%. A China-led fall by global equity markets boosted the Japanese yen and provided a modest lift for the dollar, as investors moved toward assets perceived as less risky. The dollar index (DXY 79.13, +0.19, +0.24%) , which tracks the greenback against a trade-weighted basket of six major currencies, changed hands at 79.095, up slightly from 78.995 in North American trade late Tuesday. See Currencies. Supply data ahead The American Petroleum Institute reported late Tuesday that crude supplies declined by 6.1 million barrels last week. The API also said that distillate stocks rose by 1.5 million barrels, while gasoline stocks dropped by 847,000 barrels. "The EIA numbers have not been tracking the API so closely of late, and considering the strong price gains of the past 24 hours, the possibility of a downside reversal below the $70 mark remains strong, particularly if the EIA data fails to pack enough of a surprise," said Edward Meir, analyst at MF Global, in a research note. The Energy Information Administration (EIA) will report its more closely watched data on Wednesday morning. Analysts polled by Platts expect the data to show that crude stocks rose by 1.1 million barrels during the week ended Aug. 14. They also project a decline of 1.7 million barrels in gasoline stocks as well as a build of 800,000 barrels in distillate stocks. Refinery utilization rates are expected to increase by 0.25 percentage point to 83.75%. Also on Globex, September reformulated gasoline fell 1.3% to $1.9744 a gallon and September heating oil dropped 1% to $1.8447 a gallon. September natural-gas futures fell 0.8% to $3.071 per million British thermal units.

Source