Oil fell below $53 on Tuesday, giving away some of the previous sessions gains, pressured by a stronger U.S. dollar and losses on European and U.S. stock markets.
Weekly U.S. petroleum data will be carefully watched later on Tuesday with a preliminary Reuters poll of eight analysts forecasting crude supplies increased in the week to March 20 as crude imports rose.
U.S. light crude for May delivery fell $1.16 to $52.64 a barrel by 10:30 a.m. EDT, after settling on Monday at $53.80, up $1.73.
London Brent crude was down 82 cents at $52.65.
Oil's rally was probably overdone from yesterday, there is some pressure on prices from the dollar, which has recovered slightly and tomorrow we're expecting a build in the crude stocks, that could have an impact, said Rob Montefusco, a trader at Sucden Financial.
U.S. and European stock markets turned lower on Tuesday as investors took profits following a sharp rally on Monday on the back of a fresh U.S. banking rescue plan.
The dollar rose against the yen and the euro, adding pressure to oil prices as currency investors concluded a U.S. plan to remove bad loans from banks' balance sheets would do a lot to help the U.S. economy to recover.
A preliminary Reuters poll forecast a 1.1 million barrels rise in U.S. crude oil inventories last week with imports on an upswing.
The analysts made their forecasts ahead of weekly inventory reports to be released by industry group American Petroleum Institute on Tuesday at 4:30 p.m. EDT and by the U.S. Energy Information Administration on Wednesday.
Gasoline supplies were projected to be down by a moderate 200,000 barrels and distillate supplies, which include heating oil and diesel, were expected to be little changed.
Oil prices hit their highest intraday level in 2009 on Monday as the U.S. plan to free banks of up to $1 trillion in troubled mortgage securities and other loans sent global stock markets surging and weakened the U.S. dollar.
China's refined fuel stocks rose 11 percent in February despite a sharp post-holiday rebound in domestic sales, media reported on Tuesday, suggesting demand in the world's No. 2 consumer may be weaker than thought.
Oil prices have climbed from under $33 last December, partly due to aggressive supply cuts from OPEC, but remain almost $100 below last summer's peak as the global economic crisis erodes consumption.
Nigerian oil unions on Tuesday called off plans for a workers' strike this week after the government promised to do more to improve security in the restive Niger Delta.
(Editing by James Jukwey)