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SAN FRANCISCO (MarketWatch) -- Crude-oil futures turned higher Wednesday as government data showed inventories had dropped. Earlier, oil futures had slumped on a pullback in equities in the wake of weak U.S. economic data.

Crude for July delivery (CL1N) rose 39 cents, or 0.4%, to $99.79 a barrel on the New York Mercantile Exchange.

The Energy Information Administration reported U.S. crude-oil inventories for the week ended June 10 fell 3.4 million barrels. Gasoline stocks rose 600,000 barrels.

Analysts polled by Platts expected the EIA to show a decline in crude-oil stocks of 1.9 million barrels and a rise in gasoline stocks of 1.3 million barrels.

A report from the American Petroleum Institute late Tuesday showed crude-oil inventories fell 3 million barrels in the week ended June 10.

Earlier, a 0.2% rise in U.S. consumer prices in June and a sharp drop in the New York Federal Reserve's regional manufacturing index both weighed on the broad market, raising concerns about energy demand.

Moderately positive economic reports out of the U.S. and China, along with a weaker dollar, had fueled a rally of more than 2% in the previous North American session.

Analysts at Barclays Capital said "oil demand remains very well supported," with Chinese data for May still painting "an extremely positive picture for underlying oil demand."

"We would expect International Energy Agency and the Organization of Petroleum Exporting Countries secretariat's projections to get revised higher over the course of the next few months, with a potential boost to diesel demand from the ongoing hydro-shortages providing a further boost to oil demand relative to expectations," the analysts said.

The dollar gained on Wednesday as euro-zone debt fears resurfaced. The dollar index(DXY ), which compares the U.S. unit to a basket of six major currencies, traded up at 74.99, from 74.30 late Tuesday.