Oil fell towards $117 a barrel this morning amid a strengthening US dollar as traders continued to lock-in profits after its rally to record highs earlier this week.
In contrast, London's gas oil set an all-time peak because of concerns a refinery problem in Finland and a strike that threatens to shut a refinery in Scotland may further tighten fuel supplies in Europe.
US crude fell 72 to $117.58 a barrel by 10.51am, dropping for the second straight session after it hit a record high of $119.90 on Tuesday.
London Brent crude, which also hit a record high of $116.75 on Tuesday, dipped 32 cents to $116.14.
Brokers said today's gains in the US dollar against the euro had added to oil's bearishness, a day after an increase in US crude oil inventories triggered selling by investors.
The euro slid further from this week's record high against the dollar today after Germany's Ifo corporate sentiment index eased, joining with recent soft data to fray the edges of confidence in the euro area.
Crude oil stocks surged by 2.4 million barrels in the world's top energy user last week, double the forecast level, mainly due to an increase in inventories on the US West Coast.
Meanwhile, London's gas oil futures, European benchmark for distillate products such heating fuel and diesel, struck their all-time peak of $1080.75 a tonne.
Refinery workers at Britain's Grangemouth refinery will begin a two-day strike on Sunday that will shut the plant and squeeze fuel supplies in Scotland and northern England.
Talks between the union and the plant's operator, Ineos, broke down yesterday over a company proposal to modify the salary pension plan, a union official said.
Finnish refiner Neste Oil said its diesel production line would be closed until the end of May.