Oil prices fell towards $86 a barrel today, easing back from two-year highs reached earlier in the session, as a stronger dollar prompted profit-taking.
US crude for December delivery shed 55 cents to $86.30 a barrel, having reached two-year highs of $87.49 a barrel. ICE Brent was 61 cents lower at $87.50 a barrel.
The stronger dollar - which typically trades in negative correlation with dollar-denominated commodities -- also weighed on gold prices, pulling them lower from a fresh record of $1.398 an ounce earlier.
"It is a reasonable reaction given the US dollar continues to strengthen and it was very unlikely that (oil) could continue to decouple from the US dollar," Commerzbank oil analyst Carsten Fritsch said.
"If the dollar continues to regain strength, this should weigh on oil prices and could lead to some profit-taking," he said.
The dollar index, a measure of the greenback's performance against a basket of currencies, rose 0.7 per cent to 76.950.
Commodities rallied last week after the US Federal Reserve unveiled a second round of monetary stimulus, while oil climbed after a stronger-than-expected jobs report on Friday spurred expectations of an improving economic outlook for the world's top oil consumer.
"There are signs of improving economic activity, particularly from the US with a much better than expected labor market report which signals that the US economy could see some moderate re-acceleration in the weeks or months ahead," Stefan Graber at Credit Suisse in Singapore.
While the new round of monetary stimulus in the US is boosting the appeal of commodities, a sluggish but sustained economic recovery in other industrialised economies and rampant growth in emerging Asia could fuel demand for energy and raw materials.
The Reuters-Jefferies CRB index, a global commodities benchmark, climbed above 313 points on Monday morning trade.
"Oil, as long as it stays above this area, could be considered a continued mover on to $90 and plus," said Jonathan Barratt, managing director at Commodity Broking Services in Melbourne, but added that he does not see fundamentals supporting such a price.