Brent LCOc1 futures slipped 22 cents to $79.41 a barrel at 0403 GMT, while US West Texas Intermediate (WTI) crude CLc1 fell 32 cents to $75.43 per barrel.

"There are many positive drivers for oil prices now on the demand-supply front, and while we expect WTI to rebound to near $80 a barrel, this does not signify a bull market because global central banks' dovish stance still represents a retreat of risk appetite," said CMC Markets analyst Leon Li.

"With the Fed likely to raise interest rates for the last time in July, concerns about US demand that will limit oil price gains are likely to remain."

Economists are still concerned that US inflation might not come down quickly enough even with rate hikes. A Reuters poll showed that core inflation, which strips out food and energy prices, will be only slightly lower or remain around the current level of just under 5% by the end of the year.

However, on the positive front, China's top economic planner pledged on Tuesday that it would roll out policies to "restore and expand" consumption in the world's second-largest economy, which could boost oil demand, as consumers' purchasing power remained weak.

"So far, as long as we assume the stimulus in China is going to be successful, oil balances will tighten significantly - even if Europe was to fall in a mild recession," said Rystad Energy's North America research director Claudio Galimberti.

This means prices may still break through the higher end of the current market's range at $80 a barrel, he added.

On the supply side, Russia will reduce its oil exports by 2.1 million metric tons in the third quarter in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.

Price support also came from an expected drawdown in US stocks, after data from the American Petroleum Institute, an industry group, showed crude oil, gasoline and distillate inventories all fell last week.

Traders will be watching for confirmation of the stocks drawdowns in data from the US government's Energy Information Administration on Wednesday at 10:30am EDT (1430 GMT).

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