US crude for August fell 50 cents, or 0.66 percent, to $75.44 a barrel by 1:36 p.m. EDT (1736 GMT), falling into negative territory after the inventory report. ICE Brent crude fell 41 cents to $75.03.

US oil product contracts led the decline, with the expiring July gasoline futures falling 2.60 cents, or 1.25 percent, to $2.0460 a gallon and July heating oil slipping 3.82 cents, or 1.89 percent, to $1.9831 a gallon.

Gasoline stocks unexpectedly rose 537,000 barrels and distillates inventories gained a much larger than forecast 2.46 million barrels in the week to June 25, the US Energy Information Administration reported on Wednesday.

Crude oil stocks, however, fell by 2.01 million barrels, more than double expectations.

The EIA report followed Tuesday's American Petroleum Institute report, which said crude stocks fell 3.4 million barrels, less than the EIA though both reports showed larger draw downs than the forecast 900,000-barrel.

Crude stocks at the key Cushing, Oklahoma, delivery point for benchmark US crude fell for a second week running, dropping by 795,000 barrels, according to the EIA.

Meanwhile, world stocks steadied on Wednesday after their biggest one-day plunge in more than a year, with US and European markets bouncing on the last day of the second quarter as European Central Bank funding operations calmed nerves.

Fresh banking and sovereign debt stress in Europe and growing fears of a "double-dip" recession for the global economy have gripped investors again in June's final days.

MSCI's world equity index, which has lost more than 10 percent since April and is down more than 7 percent over the first six months of 2010, held the line after losing more than 3 percent on Tuesday. The global index, up 0.06 percent on Wednesday, has recorded its worst quarter since the final three months of 2008 when the demise of Lehman Brothers sent world markets and the economy into a tailspin.

All three major US stock indexes chalked up modest gains following a report on business activity in the US Midwest showing expansion in June for a ninth straight month. The Dow Jones Industrial Average was up 10.74 points, or 0.11 percent, at 9,881.04. The benchmark Standard & Poor's 500 Index was up 3.22 points, or 0.31 percent, at 1,044.46. The Nasdaq Composite Index was up 11.25 points, or 0.53 percent, at 2,146.43.

The FTSEurofirst 300 index of top European shares unofficially closed down 0.3 percent at 993.04 points, a three-week low. The benchmark index ended the torrid quarter with a loss of 7.9 percent, its worst quarterly performance since the first quarter of 2009.

Although US and European markets firmed on Wednesday, the mood remained cautious.

Looming publication of European bank stress test results next month have added to nerves about the sector. The Bundesbank said on Wednesday that German banks have agreed to participate in EU-wide stress tests once detailed parameters are published.

Alongside European banking and sovereign debt jitters and the calendar stresses of the half-year mark, investors are increasingly fearful for global economic growth after a series of downbeat reports from the United States and China.

Wednesday data showed US private payroll gains were muted in June, rising just 13,000, as small businesses cut jobs, according to payroll giant ADP.

The benchmark 10-year US Treasury note was down 4/32, with the yield at 2.97 percent, but still below the 3 percent level. And the 2-year US Treasury note was down 2/32, with the yield at 0.64 percent, while the 30-year US Treasury bond was unchanged, with the yield at 3.93 percent.

In currencies, the dollar was down against a basket of major trading-partner currencies, with the US Dollar Index down 0.12 percent at 85.924 from a previous session close of 86.025. Against the Japanese yen, the dollar was down 0.06 percent at 88.49 from a previous session close of 88.540.

In the commodity markets, oil and gold went their separate ways.

Spot gold prices rose $2.30, or 0.19 percent, to $1,242.70. The Reuters/Jefferies CRB Index was up 0.74 of a point, or 0.29 percent, at 257.01.