Oil prices ended lower on July 1 in spite of a U.S. inventory decline, as investors felt less assured about the recovery strength of fuel demand.

The contract got a lift from U.S. government inventory data and jumped nearer to 72 dollars a barrel in the morning session. According to the U.S. Energy Department's Energy Information Administration (EIA), crude stockpiles dropped by 3.7 million barrels for the week ended June 26, the seventh decline in the past eight weeks.

However, the upward momentum was reversed as more and more investors felt uncertain about the future fuel demand. Analysts pointed out that the decline in crude inventory was mainly because of falling crude imports rather than rising consumption.

Light, sweet crude for August delivery dropped 58 cents, or 0.8percent, to settle at 69.31 dollars a barrel on the New York Mercantile Exchange. London Brent for August delivery rose 1.21 dollars, or 1.7 percent, to 70.51 dollars a barrel on the ICE Futures exchange.