Oil eased on Tuesday, falling for a fourth session on extended profit taking from last week's record high and hopes of progress towards resolving Iran's atomic stand-off when Iranian and EU officials meet later in the day.
But traders said losses were limited by Iran's reluctance to reach an agreement quickly, as well as expectations of a strong draw on US gasoline after the Independence Day holiday weekend when fresh data is released on Wednesday.
US crude futures for August delivery were down 16 cents, or 0.2 percent, at $73.45 a barrel. London Brent was down 16 cents at $72.73 a barrel.
Prices in New York are now 3.1 percent off a record high of $75.78, hit on Friday before falling on profit taking in the run-up to Tuesday's meeting between European Union foreign policy chief Javier Solana and Iran's nuclear negotiator Ali Larijani.
"In the absence of other news, there has been a lot of focus on Iran and a mini-correction over the past few days," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
"Despite the twists and turns, I'm not so sure Iran would actually stop oil exports as they need the money too much, so I'm also looking at what comes out of US gasoline demand and inventory data, which should support things above $73," he said.
US gasoline stocks probably fell 300,000 barrels last week, with solid demand partly offset by higher refinery runs and steady European imports, while crude stocks tumbled by 1.3 million barrels, according to a preliminary Reuters survey of analysts. The government data are due out on Wednesday.
PACKAGE RESPONSE Solana will push Iran to respond to a package of economic and technological incentives to halt controversial uranium enrichment ahead of Saturday's Group of Eight meeting in St Petersburg, or face possible UN Security Council action.
The package includes a state-of-the-art nuclear reactor with a guaranteed fuel supply, economic benefits and other incentives for Iran, the world's fourth-largest oil exporter, which says enrichment is solely for electricity generation.
US Secretary of State Condoleezza Rice said on Monday it was time Iran gave an "authoritative answer" to the package, designed to control a nuclear programme which the United States suspects is aimed at developing an atom bomb.
But Iran insists it is unlikely to give an answer before late August, saying it still has a number of questions about the package, even after preliminary talks with Solana last week.
Oil is falling on hopes Iran will eventually commit to diplomatic initiatives, with some analysts saying the dispute accounts for as much as $5 a barrel of current firm values.
Oil is up about 20 percent this year because of Iran's nuclear ambitions, supply cuts in Nigeria and a flood of investment fund money into commodities.
North Korea's missile test last week added to global tensions, while gasoline demand over the US summer driving season is also supporting prices.
Reports last week pointed to growth in US gasoline demand even with retail prices hitting a one-year high on July 7, selling for nearly $3 per gallon for the first time since hurricane damage caused a shortage last summer.
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