Oil weak ahead of supply, economic reports

Oil prices fell Tuesday as traders await reports on U.S. inventory levels and key economic data due out later in the week.

December crude was down 97 cents at $77.16 a barrel. Oil ended Monday's volatile session 1% higher.

Oil prices rose to a 2009 high near $82 a barrel last month. But the market has struggled to hold above $80 a barrel as concerns about weak demand and brimming stockpiles of crude weigh on prices.

The American Petroleum Institute will issue its weekly report on U.S. inventories later Tuesday, while the U.S. government Energy Information Administration will issue its supply data on Wednesday.

Analysts at MF Global expect the EIA report to show that the nation's supplies of crude oil rose 1.5 million barrel in the week ended Oct. 30. Gasoline stocks are forecast to rise 500,000 barrels and distillate supplies are seen up 1 million barrels.

In addition to supply data, traders are also awaiting economic data and the outcome of the Federal Reserve's two-day policy meeting, which gets underway Tuesday.

A reading on factory orders comes out at 10 a.m. ET. A report on auto sales in October is also on tap.

The government's closely watched monthly jobs report is due Friday. Economists surveyed by Briefing.com believe payrolls shrank by 175,000 jobs in October after a loss of 263,000 jobs in September.

Meanwhile, the U.S. central bank is widely expected to hold interest rates at historic lows near 0%. Investors will be tuning into the Fed's statement, which is due out Wednesday, for any hints as to when it plans to start removing the billions of dollars of stimulus funds it has poured into the economy since the financial crisis took hold.

In its most recent report, the Fed said the economy has shown mild signs of stabilizing. Housing and manufacturing continued to improve but the labor market remained weak or mixed.