Oil paused below $79 a barrel on Tuesday, steady after three straight days of decline as investors awaited new leads from equities markets and weekly crude inventory data from the United States.
U.S. crude for December delivery edged down 6 cents to $78.62 a barrel by 0931 GMT (5:31 a.m. EDT), after settling down $1.82 at $78.68 on Monday.
London Brent crude was down 2 cents at $77.24.
Traders will look mainly to the dollar on Tuesday as well as the weekly American Petroleum Institute (API) crude oil report later in the session for clues on fuel demand in the world's largest energy consumer.
At this time it (the oil market) is more dependent on the direction of the dollar than it is on whatever the DOE, OPEC, China or even Goldman Sachs has to say, analysts at the Schork Group said in their daily Schork Report newsletter.
The dollar slipped against the euro on Tuesday after a Monday rally on speculation the Federal Reserve would signal a tightening in monetary policy down the road.
Highlighting skittishness over stocks, commodities and growth-linked currencies, the Chicago Board Options Exchange Volatility Index <.VIX>, Wall Street's favorite metric for market sentiment, jumped 9.16 percent on Monday.
European equity markets bucked the trend to rise 0.04 percent, with energy stocks taking the lead after oil heavyweight BP's
Although crude prices have risen almost 77 percent this year, they are still about half the record of more than $147 per barrel touched last July.
Analysts said investors were likely to remain wary ahead of U.S. consumer numbers for October and house price index data for August, both due later in the day. Also, some cautiousness among traders is likely to prevail ahead of third-quarter U.S. gross domestic product (GDP) data on Thursday.
Analysts expect the U.S. economy to expand 3.3 percent in the third quarter
U.S. crude inventories probably rose 1.4 million barrels last week, according to a preliminary Reuters poll ahead of an American Petroleum Institute's weekly data later on Tuesday.
Distillate stocks probably declined 900,000 barrels, while gasoline stocks were seen down 300,000 barrels, the poll showed.
(Additional reporting by Fayen Wong in Perth; Editing by Sue Thomas)