Oil prices fell for a second straight day on Tuesday to below $58 a barrel on weaker equities, consolidating after touching a six-month peak last week, as China disappointed markets with a sharp drop in April exports.
Crude prices touched $58.75 on Friday, the highest since November, after the United States shed fewer-than-expected jobs in April and government stress tests results calmed uncertainty over the health of U.S. banks.
U.S. crude fell 64 cents to $57.86 a barrel at 0630 GMT (2:30 a.m. EDT) and London Brent crude slid 57 cents to $56.91.
Weighing on U.S.-driven optimism for economic recovery last week, China on Tuesday reported a sharp fall in exports in April that overshadowed strength in capital spending.
But crude demand by the world's No.2 energy user was more heartening, with Chinese customs confirming on Tuesday crude imports in April rose in the first monthly increase of the year to hit the second-highest daily rate on record.
Analysts said crude's fall this week represented a healthy pullback from last week's rally.
Overall sentiment is still positive. It's a consolidation of last week's rise to a six-month high, which is a welcomed respite. There's some fear that it's gone up too much, Michelle Kwek, an analyst at Informa Global Markets in Singapore, said.
Investors took profits in equity markets this week, driving the Dow Jones industrial average <.DJI> down 1.8 percent on Monday. Tokyo's Nikkei average <.N225> fell 1.6 percent on Tuesday.
Federal Reserve Chairman Ben Bernanke struck an optimistic note as the market digested China's trade figures, saying the U.S. government's stress tests appeared to be helping banks gain access to private capital.
He also said the dollar would be strong, because the U.S. central bank would keep inflation at bay by raising interest rates when the time is right.
The dollar edged down against a basket of currencies but held firm versus the euro on Tuesday. A stronger dollar is bearish for oil as it makes the commodity more expensive for holders of other currencies.
Oil has plunged from a record high above $147 a barrel hit in July, but a rally in stock markets over the last few months has helped lift U.S. crude up almost 80 percent from a January low of $32.70 a barrel.
Given a dearth of important economic data this week, traders will look out for U.S. oil inventory data for some direction.
U.S. crude stockpiles probably rose for the 10th straight time last week, up by 1.2 million barrels, while distillate stocks likely rose 1.1 million and gasoline stocks fell by 500,000 barrels, a preliminary Reuters poll ahead of weekly government inventory data released Wednesday showed.
(Editing by Ben Tan)