Oil held near $70 today as Washington dismissed Iran's move suggesting ways to ease tension over Tehran's nuclear plan.
US light crude edged up 15 cents to $69.92 a barrel after falling 42 cents yesterday on hopes the unprecedented letter from Iranian President Mahmoud Ahmadinejad to President Bush could help break the diplomatic impasse.
London Brent crude rose 29 cents to $70.50 a barrel.
US officials have shrugged off the letter as a ploy, timed to influence a Security Council debate as Washington seeks to forge a consensus among major powers for UN action against Iran over suspicions it is trying to build a nuclear bomb.
After a late-night meeting, officials said foreign ministers of major powers failed to agree on a joint strategy after Iran's last-minute gesture, with China insisting that any reference to possible sanctions or war should be eliminated from the UN resolution ordering Tehran to halt uranium enrichment.
The market is pressured by expectations of a 1.5 million-barrel rise in gasoline stocks in the United States for the second-straight week as refinery activity intensifies, ahead of the holiday driving season.
Six US states, worried about summer gasoline supplies, have also asked federal officials about possible waivers from clean fuel rules, the head of the Environmental Protection Agency said.