Reuters

London, Jul 8: Oil dipped below $63 a barrel on Tuesday, pressured by investors' caution over prospects for economic recovery and by an expected increase in US gasoline stocks for the week when Americans traditionally drive the most.

US crude futures fell $1.17 to $62.88 a barrel by 1405 GMT, reversing an earlier gain to as high as $64.91. London Brent crude was 92 cents lower at $63.13.

Oil prices have fallen from $73 struck in late June, with US crude closing at $64.05 on Monday, its lowest settlement in more than a month.

Market jitters over economic recovery and an expected increase in US gasoline stocks for the week of the July 4 Independence Day holiday pressured oil, said Harry Tchilinguirian, senior oil analyst with BNP Paribas.

"Looking at another build in gasoline inventories, consumer confidence is weighed down by higher retail prices and rising unemployment and so the number of Americans taking to the road over the holiday weekend was probably lower than last year," Tchilinguirian said.

"This is most likely part of the broader correction that we have been seeing over the past trading sessions. People are re-assessing the quality of the green shoots in the economy."

Analysts in a Reuters poll expected weekly data from the American Petroleum Institute (API) and US Energy Information Administration to show increases by about 2.2 million barrels in gasoline stocks.

The expected increases in gasoline and middle distillate inventories are likely to overshadow any drop in crude inventories.

Industry group API will release its weekly crude and products stocks data at 2030 GMT on Tuesday and the EIA on Wednesday.

The EIA will release its monthly report later on Tuesday. In June, it raised its forecast for 2009 world demand by 10,000 barrels per day (bpd) to 83.68 million bpd, the first time since September that it had increased the demand estimate in its rolling monthly forecast.