The Paris-based International Energy Agency forecast that crude supplies would be comfortable for five years, further stoking bearish sentiment.

In early trading, oil tumbled to its biggest loss in two weeks. But the market pared losses after US government data showed a much smaller build in crude oil inventories than that reported by an industry group late on Tuesday.

The government data also showed improved weekly demand for gasoline and distillates over a four-week period, helping the crude prices move off their early lows.

US crude for August delivery fell $1.20, or nearly 2 percent, to $76.65 a barrel at 1:35 p.m. EDT (1735 GMT), after hitting a session low of $75.17. It was the second straight day

of decline. ICE Brent crude futures for August fell $1.53 to 76.51 a barrel.

The average daily global oil consumption is expected to grow by 1.2 million barrels each year between 2009 and 2015 supply will largely keep pace, the IEA said in its annual medium-term oil and gas report.

Meanwhile, Global stocks and the euro fell on Wednesday. The Dow Jones Industrial Average inched down 1,73 points, or 0.02 percent, to 10,291.79, while the Standard & Poor's 500 Index dropped 3.56 points, or 0.33 percent, to 1,091.75. The Nasdaq Composite Index was down 6.34 points, or 0.28 percent, at 2,255.46.

In Europe, the FTSEurofirst 300 index of top shares closed down 1.02 percent, with technical charts suggesting there could be more declines over the coming days.

MSCI's all-country stock index dropped 1 percent, while the firm's index of emerging market stocks fell 1.1 percent.

During Asian trading hours, Japan's Nikkei average lost 1.9 percent to end at 9,923.70, a one-week closing low, as it approached a major support level of 9,800, and investors sold some shares on renewed concerns about the euro zone.

The euro, which was already struggling on concerns about the euro zone's banking system, slipped 0.26 percent at $1.2234 after the US housing data.

The benchmark 10-year US Treasury note jumped 13/32 in price, to yield 3.1172 percent, after the housing data.

Gold prices dropped 0.68 percent to $1,230.50 in response to the dollar's strength and stocks' decline after the weak US home sales data.