Oil fell nearly $1 to below $68 a barrel on Tuesday as investors took profit from a jump of more than 3 percent a day earlier, but analysts said sentiment remained bullish amid growing signs of economic recovery.

Crude prices hit a near seven-month high and Wall Street soared on Monday after data showed U.S. manufacturing contracted at a slower-than-expected pace in May, industry activity expanded in China and surveys showed Europe's situation was also easing.

The dollar, which hit its lowest this year a day ago and made oil more attractive to investors, steadied on Tuesday.

U.S. crude fell 95 cents to $67.63 a barrel by 0641 GMT. It hit its highest settlement since November 4 on Monday.

London Brent crude dipped 83 cents to $67.14.

Prices are a little inflated based on inventories in the United States and in terms of real demand, but if you have to pick a direction for oil, it has to be up, based on the favorable indicators, said Ben Westmore, a commodities analyst at National Australia Bank.

Global consumer confidence is stabilizing after falling for 18 months, an Ipsos/Reuters poll of 23 countries found, adding to growing hopes of recovery that has buoyed equity markets for the last few months.

Another fresh indication for economic recovery came from China, where sales for bankrupt General Motors Corp jumped 75 percent in May.

Oil prices gained 30 percent in May amid a broad-based commodities rally on signs of a turnaround, as they pull away from the lows below $33 a barrel touched in December, pushing OPEC to maintain output targets when it met in Vienna last week.

The Reuters-Jefferies CRB index <.CRB>, which tracks 19 mostly U.S.-traded commodity markets, jumped 3 percent on Monday in its biggest one-day increase in two months, and staged its best monthly gains in 35 years in May.

There are real signs that physical demand is returning... We are generally seeing more consistency in the impact of measures (to rein in the economic crisis), Westmore said.

Traders will shift their focus to U.S. oil inventory data for indications on fundamentals in the world's top consumer, with the American Petroleum Institute's report due later on Tuesday and the more authoritative U.S. Energy Information Administration's data expected on Wednesday.

A Reuters survey of analysts forecast weekly U.S. inventory data would show a 1.5-million-barrel decline in crude stocks for the week to May 29, while gasoline and distillate inventories were seen rising.

The 2009 Atlantic hurricane season officially started on Monday and would run through November 30, but analysts said the potential supply impact for this year would likely be softer because U.S. stockpiles were brimming.

(Reporting by Chua Baizhen; Editing by Clarence Fernandez)