US West Texas Intermediate crude was up 4 cents at $44.69 per barrel, after initially trading higher then falling. It fell 59 cents, or 1.3%, to settle at $44.65 in the previous session. The front-month August contract will expire at the end of Wednesday's session.

Crude is "looking rather trepidative ahead of another weekly inventory report, while dollar strength is also helping to put the kibosh on a rally," Matt Smith, an analyst at oil cargo tracker and energy data provider ClipperData, said in a blog post.

The dollar firmed in Asian trading on Wednesday, as strong US data and rising expectations that the Bank of Japan will muster additional easing steps sent the dollar index to four-month highs.

US crude rose earlier after industry group the American Petroleum Institute (API) reported crude stockpiles fell by 2.3 million barrels last week. That was just above a 2.1 million-barrels draw forecast in a Reuters poll.

For distillate inventories including diesel, API reported a surprise draw of 484,000 barrels. But it also showed there was an unexpected gasoline build of 805,000 barrels.

The US government's Energy Information Administration (EIA) will issue stockpile data later on Wednesday.

If the EIA confirms a drawdown, it will be the ninth straight week that US crude stockpiles have fallen.

Adding to the sense of oversupply for oil products, China's June gasoline output rose 8.7% from a year ago to 11 million tonnes, or about 3.1 million barrels per day, the Statistics Bureau said on Wednesday.

Diesel output last month fell 4.5% from a year ago, while kerosene supply shot up 10.5%, the bureau said. Liquefied petroleum gas, used mainly in cooking and sometimes for petrochemical feedstocks, rose 18.9% and naphtha production, mainly used for petrochemicals, climbed 15.7% from a year ago.

China is the world's second-largest oil consumer.