Oil prices fell below $56 today, retreating further from record peaks due to rising US crude oil inventories.
US light crude shed 64 cents to $55.40 a barrel, around $3 below Monday's all-time high of $58.28.
London Brent crude fell 54 cents to $54.90 a barrel. Prices eased as the US Energy Information Administration said crude oil inventories, already at the highest level in three years, rose again last week.
US crude stocks rose 2.4 million barrels to 317.1 million for the week ended April 1st, as imports rolled in near 10 million barrels daily the EIA said.
Gasoline stocks fell by 2.1 million barrels to 212.3 million as demand ran nearly 2 percent ahead of last year despite record high prices at the pump, the EIA said.
The dollar hovered near five-month highs against the yen today, encouraging speculative funds to book profits from the recent oil price rally and move back to the currency market, analysts said.
"The funds are getting nervous about higher interest rates and a higher dollar, so they are taking profits. Any talk about inflation makes the market nervous," said Keiichi Sano, assistant manager of Sumitomo Corp's commodities business unit in Tokyo.
US Federal Reserve Chairman Alan Greenspan said yesterday market forces could eventually lead to a big enough increase in crude oil inventories to cool the recent oil price "frenzy" but expressed concern about a lack of global refining capacity.
Higher prices have slowed oil demand growth, "but only modestly," Mr Greenspan said.