Oil retreated to $115 a barrel today as a stronger dollar extended a sell-off and investors shifted cash to equities, but concerns over supply constraints limited losses.
US crude futures fell $1.01 to $115.05 a barrel by 9.12am, adding to a loss of $2.24 a barrel today. London Brent crude dropped $1.17 to $113.17 a barrel.
Prices have weakened 4 per cent from Tuesday's record-high of $119.90 a barrel as the US dollar rebounded from record lows.
Today, the dollar rose to a two-month high against the yen and held firm against the euro after data the previous day showed signs of resilience in the U.S. labour market.
The euro stayed away from its record high of $1.6020 hit on Tuesday, undermined by weak economic growth data in Germany and France - the euro zone's two biggest markets. The euro was seen at $1.5586.
"The risks of an economic slowdown in the European Union caused the selling of the euro against the dollar," said Tetsu Emori, fund manager at Astmax Co in Tokyo.
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
Analysts said the strengthening dollar helped offset worries over supply disruptions in the North Sea.
BP said it has begun shutting down UK's Forties North Sea oil pipeline in preparation for a planned strike at a major Scottish refinery this weekend.
The 700,000 barrel-a-day Forties pipeline carries about half of Britain's North Sea oil production.