Crude oil prices fell four per cent below $68 a barrel yesterday, reversing some of the previous day's steep surge, after Barack Obama's victory in the U.S. presidential election boosted the dollar.
U.S. crude fell $2.91 to $67.62 a barrel by 0853 GMT. London Brent crude lost $2.94 to $63.50.
Markets had rallied sharply on Tuesday, partly on anticipation of the victory, which some analysts said should help extend the U.S. dollar's recovery.
"Prices have slipped back overnight as we were overdone on the upside yesterday, and we're seeing a stronger dollar on the back of the Obama victory," said Rob Laughlin of MF Global.
The dollar which posted its biggest one-day slide against the euro since that currency's 1999 launch on Tuesday rebounded against major currencies on Wednesday, rising more than one per cent against the euro.
Oil traders' focus later in the day is likely to turn to weekly U.S. oil inventories, with crude oil stocks expected to rise by 1.1 million barrels last week.
Crude prices have fallen by half from a record high of $147.27 a barrel in July as the global credit crisis hit the wider economy, dampening fuel demand in major consumer nations.
Oil had surged from $6.62 or 10.36 percent on Tuesday, the largest one-day gain since September 22, indicating that Saudi Arabia and other OPEC members had made cuts in oil exports.
Saudi Arabia has reduced exports after the Organisation of the Petroleum Exporting Countries agreed last month to lower output, according to trade sources.
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