Oil fell towards $87 per barrel on Monday as dollar-based commodities declined on the strengthening U.S Dollar.

At 2:30 p.m. EDT, U.S. crude was down $1.35 at $87.25 a barrel, retreating from last week's all-time high of $90.07. London Brent crude was 65 cents lower at $83.14.

Dealers said the dollar's rebound from a record low against the euro alongside sliding world stock markets following a flurry of weak corporate earnings results was encouraging selling across energy and metals, according to Reuters.

The dollar gained as much as 1.2 percent, partly as investors sought safety in U.S. Treasuries after losses in European and Asian stock markets. U

Analysts said news that Kurdish rebels fighting Turkish troops near the Iraqi border could announce a cease-fire Monday evening added to Monday's losses.

Turkey had vowed Sunday to take tough action after the rebels killed 17 of its soldiers, raising fears of wider instability in the Middle East.

Oil touched an intraday record of $90.07 on Oct. 19, the highest since futures began trading in 1983, after Turkish lawmakers approved a resolution to strike militants in Iraq, home to the world's third-largest oil reserves.