Oil prices fell for a second day on Wednesday after an industry report showed unexpected gains in US crude and gasoline inventories, while weak US home sales data drove equities lower and dampened risk appetite.

Global stock markets fell after a report on Tuesday showing that sales of existing homes in the US dropped unexpectedly in May. Japan's Nikkei average fell 1.6 per cent on Wednesday as the positive impact of China's yuan revaluation faded.

"If the stock market is going down, it is a factor to drive the crude market lower," said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan. "People continue profit taking after the API stockbuild."

US crude for August delivery slid 49 cents to $77.36 a barrel by 0326 GMT, after the July contract expired on Tuesday.

Prices are little changed this week after a jump to almost $79 two days ago following China's weekend decision to make the yuan exchange rate more flexible.

ICE Brent for August fell 35 cents to $77.69.

US crude prices have recovered about 20 per cent from a trough below $65 a barrel a month ago, but are still about $10 lower than an early-May 19-month peak above $87.

Crude stockpiles in the US rose 3.7 million barrels last week, the American Petroleum Institute (API) said on Tuesday, while gasoline supplies climbed 810,000 barrels.

US stockpiles of distillates including heating oil and diesel rose 1.1 million barrels last week, the API said, broadly in line with analyst forecasts.

Traders are also watching for government statistics on US oil inventories and demand from the Energy Information Administration due on Wednesday at 1430 GMT.

Investors also awaited Wednesday's conclusion of a two-day US Federal Reserve's Federal Open Market Committee meeting, with a statement due at 1815 GMT, for signs that low interest rates will remain intact.

Yuan effect fades

The oil market showed little reaction to the publication of the yuan's trading range mid-point on Wednesday, even after the central bank of China set it slightly stronger than Tuesday's close. Oil prices posted short-lived gains on Tuesday after the bank set the mid-point at its strongest since 2005.

"It was more a sentiment-driven reaction," said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.

"China is importing a lot of oil and a stronger yuan favours it, but it comes down to whether the economy continues to grow. The revaluation helps address global imbalances and allow for more sustainable growth in the long term."

MasterCard's SpendingPulse report said US weekly retail gasoline demand rose 0.4 per cent last week versus the previous week. But demand dropped 2.7 per cent from a year earlier.

US highway travel jumped 1.2 per cent in April from a year earlier, rising 3.1 billion miles to nearly 256 billion miles, the US Transportation Department said on Tuesday.

A US judge blocked the Obama administration's six-month ban on deepwater drilling imposed in the wake of BP Plc's Gulf of Mexico oil spill, but the White House said it would appeal the ruling, issued on a challenge by oil firms involved in offshore drilling. – Reuters