New York's main contract, light sweet crude for February delivery, shed 1.40 dollars to 77.62 dollars a barrel.

London's Brent North Sea crude for delivery in March eased 1.31 dollars to 76.32 dollars a barrel.

Oil investors reacted to a statement by a top Beijing regulator that China would rein in credit after explosive growth last year as the world's most populous nation moved to cool its red-hot economy.

Some analysts see oil prices falling further to the 75 dollar levels as concerns over the Chinese economy and excess supply dog the market.

"The big story is with China trying to slow down its lending and its overheating economy -- that would mean lower demand for oil products that was expected in the future," said Andy Lipow, president of Lipow Oil Associates.

"We could easily go to 75 dollars in the near term and should inventories, especially gasoline and distillates, continue to rise, then I think oil prices could go to 70 dollars," he said.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said Wednesday that new bank loans in China this year would fall to about 7.5 trillion yuan (1.1 trillion US dollars) from about 9.5 trillion yuan in 2009.

"This year, we will continue to control the pace of the credit supply," Liu told the Asian Financial Forum in Hong Kong.

But the watchdog's chief denied a report that it had asked several banks to stop extending new loans for the rest of this month.

Chinese state media had reported that major banks received verbal orders from authorities to stop lending for the rest of January.

His comments come after China's central bank moved earlier this month to hike the minimum amount of money that banks must keep in reserve.

Analysts have said the policy was likely a response to concerns about asset bubbles, bad loans and an overheating economy.

Adding to the market concerns was excess oil stockpiles in the United States, the world's largest energy consumer.

An upcoming US government report on energy stockpiles was expected to show an increase, which would indicate weaker demand.

The inventories report is due for release on Thursday, one day later than normal owing to a US bank holiday on Monday.

"Participants expect more additions to burgeoning stockpiles tomorrow when weekly inventory data are released in the US," said Mike Fitzpatrick, vice president of MF Global.

"Skepticism seems to be gaining as to the pace and sustainability of recovery," he said.

Crude futures had recovered Tuesday after a five-session losing streak as oil cartel OPEC had forecast modest growth in world crude demand this year.

A strengthening greenback also weighed on prices because it makes the dollar-priced commodity more expensive to buyers who hold weaker currencies.

The euro tumbled under 1.42 dollars on Wednesday as worries mounted over the outlook for the European economy in light of weak German data and Greece's fiscal woes, dealers said.

The European single currency plunged as low as 1.4127 dollars, which was the lowest point since August 19.

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