NEW YORK (Dow Jones)--Crude oil futures fell slightly Wednesday ahead of government data that is expected to show increases in U.S. oil and fuel inventories. Light, sweet crude for November delivery recently traded 7 cents, or 0.1%, lower at $70.81 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 6 cents, or 0.1%, higher at $68.62 a barrel. The oil market often enters a lull before the release of government oil inventory data, where surprising drops or increases in stockpiles often cause dramatic price movements. On Tuesday, the American Petroleum Institute reported a 250,000-barrel drop in oil inventories, where analysts had given an average forecast for a 1.7-million-barrel increase. Gasoline stocks rose 500,000 barrels, close to the anticipated 600,000 barrels, while distillate inventories, including heating oil and diesel, fell 2.9 million barrels, where analysts had expected a 200,000-barrel build. If fuel inventories keep rising through the autumn and into the winter, refiners are expected to cut operating rates. Sunoco Inc. (SUN) on Tuesday said it would halt its Eagle Point refinery in Westville, N.J., the first major plant shutdown this year. The reduced demand from U.S. refiners for crude is likely to create an even bigger oil surplus, doing little to change the status quo of bulging inventories in the U.S. However, widespread cuts in crude processing rates could hasten a rally once demand recovers, analysts said. "If other refineries follow suit to protect profits, we could run into a rally in demand that is going to take the system longer than necessary to catch up," wrote Carl Larry, president of Oil Outlooks and Opinions in Houston. Analysts say oil prices are likely to stay close to $70 a barrel as long as there is a widespread belief in the market that demand is slowly improving. That prospect has kept oil prices close to $70 a barrel for more than four months, despite high inventories. Oil prices were pressured Wednesday by a strengthening dollar, which has almost completely clawed back Tuesday's steep decline. Currency traders cited a large investor stepping into the market to halt the dollar's slide, which encouraged others who believe the U.S. currency is due for a reversal after hitting a 2009 low against the euro in September. Crude futures, which are priced in dollars, tend to fall in value when the greenback strengthens, as the commodity becomes more expensive for holders of other currencies. Front-month November reformulated gasoline blendstock, or RBOB, recently traded 25 points, or 0.1%, higher at $1.7752 a gallon. November heating oil traded 49 points, or 0.3%, higher at $1.8191 a gallon.

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