Oil slid for a third day today towards $76 as stock markets in Asia fell after disappointing US economic indicators, while a potential Atlantic storm provided some support to prices.
Japan's Nikkei average shed almost 3 per cent today, after reports showing US industrial production slowed sharply last month and manufacturing output snapped a three-month streak of increases capped Wall Street gains yesterday.
But there was some positive economic news as US claims for jobless benefits tumbled to a near two-year low last week.
An oceanic weather system in the central Caribbean had a 10 per cent chance of strengthening into a tropical cyclone over the next two days, the US National Hurricane Center said. It was days away from potentially entering the oil-rich Gulf of Mexico.
"Given that the economic outlook is mixed, the key will be the weather as we head into the hurricane season," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney, adding that prices could reach $80 as soon as next week.
US crude for August fell 14 cents to $76.48 a barrel earlier, extending yesterday's slide of more than 0.5 per cent.
The contract was heading for its second consecutive weekly increase, trading a few cents higher than last Friday's close.
Prices have traded in a range between $71 and $80 for almost six weeks as volatility related to the European debt crisis dwindled. Over the year, they have stayed within a $23 range, hitting a 19-month peak above $87 and a trough below $65, both in May.
The market's attention will be on US consumer prices and the Reuters-University of Michigan sentiment index due out later today.