Oil prices slipped today in choppy trading as weak economic data fuelled concerns about demand that have contributed to crude's 15% decline so far in May.
The US dollar index seesawed with the euro and the greenback's weakness late helped oil pare losses, traders and brokers said.
Oil felt pressure from news that US housing starts and building permits fell in April and factory output slumped.
US gasoline futures slid sharply early, then pared losses after tumbling nearly 5% the previous session on the receding threat to refineries from flooding in the Mississippi River delta.
Brent crude for July delivery dropped 85 cents to settle at $US109.99 a barrel, bouncing after earlier falling as low as $US108.07.
US crude for June delivery slipped 46 cents to end at a 12-week low settlement of $US96.91 a barrel, having dropped as low as $US95.02 on the day that June crude options expired on the New York Mercantile Exchange.
Traders and analysts noted open interest concentrated on puts at the June crude option $US95 strike price.
US crude trading volumes were 10% above the 30-day average, more robust than Brent volumes that were about 4% below.
"With the housing numbers coming in soft and industrial production coming in (near) flat, there is some concern there will be a double dip in the housing slump and on a broader scale for the economy as a whole," said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago.
"We're seeing further liquidation on the precious metals, and that's offering some outside pressure on the oil market as well."
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Copper ended lower for the first time in four sessions as the weak US economic data weighed on the industrial metal. Weak US retail and corporate earnings and the dollar's early strength pressured gold..
Concerns about the European debt crisis also weighed on oil, as investors watched to see if peripheral economies such as Greece and Portugal will be able to meet their obligations.
The euro bounced and rose against the dollar in choppy trading, but remained vulnerable on concerns Greece might restructure its massive debt.
The dollar index, measuring it against a basket of currencies, edged lower late after earlier being bolstered by the yen's weakness.
A stronger dollar can pressure dollar-denominated oil prices by raising the price for consumers using other currencies and pulling investment from commodities to less risky markets.
US oil inventories
US crude, gasoline and heating oil futures turned higher in post-settlement trading after a report from the industry group American Petroleum Institute showed gasoline and total distillate stocks fell last week.
Crude stocks rose 2.7 million barrels, gasoline stocks fell 676,000 barrels and distillates dropped 2.8 million barrels, the API said.
Ahead of the API report, a Reuters survey of analysts had forecast US crude inventories would be up for the fourth straight week, but only by 1 million barrels.
Gasoline stocks were seen up 800,000 barrels and distillate stockpiles up only 700,000 barrels.
"The report on its face is neutral, but the product draws continue to impress, especially given the retail price point," said John Kilduff, partner at Again Capital LLC in New York.
Rising water levels on the Mississippi River looked less likely to hurt eight refineries in Louisiana after US Army engineers began opening flood gates, helping US gasoline futures settle lower today.
The gasoline crack spread, or profit margin for refiners, pulled back more than $US3 to just below $US26 a barrel, after pushing above $US40 on May 10.
US retail gasoline demand fell last week compared with a year ago, but was up versus the previous week, a report from MasterCard Advisors' said on Tuesday.
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