Crude for October delivery rose 34 cents to $68.39 per barrel on Globex by Wednesday afternoon in Tokyo.
Oil is "still overvalued; fundamentals still bearish," said Darin Newsom, senior analyst at Telvent/DTN, a provider of market analysis. "Last week's move to $75 seemed a bit overdone."
Crude hit $75 a barrel last week for the first time in 10 months.
"There wasn't any reason for the market to move to a new high," said Newsom. "There was some talk that gasoline demand was picking up, providing support to crude oil, but that has died out this week."
"Also, crude oil was supported by a lower U.S. dollar index. However, it has ignored the continued weakness of the dollar this week as it sold off quickly Monday and Tuesday," he said.
October crude futures finished Tuesday's trading session on the New York Mercantile Exchange at $68.05, the lowest closing price for a front-month contract since Aug. 18. See Tuesday's Futures Movers.
Late Tuesday afternoon in Washington, the American Petroleum Institute reported that crude supplies fell by 3.2 million barrels for the week ended Aug. 28.
The Energy Information Administration is scheduled to release a separate weekly petroleum report Wednesday morning in Washington.
Analysts surveyed by Platts expect to see a decline of 1.9 million barrels in crude stocks. They also project a drop of 1.4 million barrels in gasoline inventories and a decline of 600,000 in distillate stockpiles, which include heating oil and diesel.
