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 The greenback hit an eight-year high versus the yen and scaled a
near 12-year peak against the euro, dragging on commodities priced
in the dollar by making them expensive for holders of other
currencies.
Brent fell 52 cents to $58.01 by 0817 GMT (4:17 a.m. EDT) , while
U.S. crude dropped 34 cents to $49.66.
Both benchmarks had risen earlier in the day to $58.72 and $50.36,
respectively, underpinned by China data.
China, which is battling growing deflationary pressures, saw
consumer inflation rise 1.4 percent in February, beating the 0.9
percent gain estimated by analysts. A slide in producer prices,
however, underscored the deepening weakness in the economy.
"The consumer price index figure is mildly positive" for oil prices,
said Ric Spooner, chief market analyst at Sydney's CMC Markets. It
means that demand in China was "a little bit better than expected",
Spooner added.
The U.S. benchmark also drew support from a report by market data
firm Genscape that showed a modest stock build last week at the
Cushing, Oklahoma delivery point, traders said.
Investors are now waiting for weekly U.S. inventory reports from
industry group the American Petroleum Institute and the U.S.
Department of Energy's Energy Information Administration this week
for further price direction.
"Oil prices may soften if there is an increase in stocks in the U.S.
- we can expect a continued increase of inventories," Ken Hasegawa,
commodity sales manager at Tokyo's Newedge Japan.
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According to a Reuters survey, U.S. crude stocks are set to extend
their record build for a ninth week.
"Brent and WTI continue to trend sideways, with WTI facing more
volatility. Brent has been descending for the past few days and we
believe that it is hovering near a support level," said Singapore's
Phillip Futures in a research note on Tuesday.
Analysts, however, do not expect any near-term upside to oil prices
from ongoing geopolitical tensions.
Investors have already priced tensions in the Middle East into
current oil prices, Spooner said.
"Middle East supply changes are always a wild card, but there is
nothing on the clear horizon," Spooner added.
(Editing by Himani Sarkar)
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