Oil prices hovered below record highs this morning, after the US dollar rose on surprisingly robust US economic data that moved supply concerns to the back of investors' minds for now.
US light crude fell 28 cents to 113.51 a barrel by 2.40am, off yesterday's record high of $114.08, but still up nearly four-fifths from a year ago.
London Brent crude fell 38 cents to $111.20.
The weak dollar - together with strong demand - has driven oil and other commodities like corn, gold and rice to record highs in recent months, as investors and speculators have sought a hedge against inflation.
The dollar rose against today after robust US inflation and manufacturing data suggested the US Federal Reserve may be less aggressive in cutting interest rates.
Lifting some concerns over a supply squeeze, Mexico, a major supplier to the US, reopened its three main Gulf of Mexico oil ports as bad weather cleared, the government said. Only a smaller Pacific port remained shut.
But in a sign that consuming countries were still concerned about a supply shortfall, Britain's prime minister Gordon Brown on Tuesday called on the Organization of the Petroleum Exporting Countries to boost production to counter rapidly rising prices.
OPEC, which pumps more than a third of the world's oil, said late last night it was supplying enough oil and the US economic slowdown may weaken consumption in the second quarter, underscoring its reluctance to raise supply.
Demand in the world's top consumer may be losing steam. US crude oil imports fell in February to the lowest level in a year.
They declined by 486,000 barrels per day, or 4.9 per cent, from the month before to 9.514 million bpd, the federal Energy Information Administration said.