Oil prices pared losses of more than 2 percent on Tuesday as the dollar erased gains.
The big thing driving oil at the moment is a stronger dollar... there are going to be excuses to take it up or downwards but what we're trying to do now after these big moves is to get the market back into some kind of trading range, said David Morrison, a strategist at GFT.
Brent was 1 cent lower at $115.89 at 1205 GMT, recovering from a low of $113.58 earlier in the session.
U.S. crude was 28 cents lower at $102.27 a barrel, paring losses of more than 2 percent on Tuesday.
The price response was mixed to higher Chinese crude imports and plans to increase margins for exchange-traded oil futures.
Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24 million barrels of crude oil per day (bpd), up 1.7 percent on the year, official Customs data showed on Tuesday.
But a 17 percent drop in oil product imports to 3.22 million tons in April sent mixed signals to the market, as smaller refineries cut runs to cope with high oil prices, diminishing Chinese demand for feedstocks.
Small teapot refineries more reactive to margins (10 to 15 percent of supplies) have very significantly reduced production and that should be taken into account... and makes the latest data less bullish, said Christophe Barret, an analyst at Credit Agricole.
An unexpected jump in Chinese demand for crude oil is a double-edged sword, analysts say, as signs of economic strength balance against prospects of another round of economic tightening in China.
People are still trying to figure out how much monetary tightening will play a role in slowing growth over the next quarters, said Jeremy Friesen, commodity strategist at Societe Generale.
Higher margin requirements announced by CME Group Inc
Most people see a margin hike and expect the contract to fall as people reduce size to cover higher margins, but perhaps some of the rally yesterday was covering shorts ahead of the margin hike also, said Carl Larry, an analyst of derivatives trading and markets research at Blue Ocean Brokerage.
The CME, the world's largest commodities exchange, raised the margin call on crude futures for a fourth time since February in an effort to tackle rising volatility.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default and are based on the largest most-likely daily market move.
Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets, said Ben Westmore, commodity economist at National Australia Bank
The cumulative increase in margins to maintain positions on U.S. crude benchmark West Texas Intermediate traded on NYMEX since February is 67 percent, with the cost rising to $6,250 per contract from $3,750.
CME's move comes after a volatile week of oil trading that saw U.S. crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel. [nN09267830]
The Chicago Board Options Exchange's oil volatility index <.OVX> soared to the highest in almost a year during Thursday's rout, touching 48.64.
(Additional reporting by Alejandro Barbajosa, Randy Fabi and Manolo Serapio Jr.; editing by James Jukwey)