The ebb and flow in investors' sentiment on global crude's demand-supply dynamics pushed futures down over 1 per cent on Tuesday; with the Russia-Ukraine war intensifying, supply concerns limited losses.
The international benchmark, Brent crude, fell 1.2 per cent to $111.75 a barrel after rising more than $1 to $114.21 earlier in the session. US crude was down 1.5% at $106.57 a barrel after rising to $108.92 earlier.
Both the contracts had gained over 1 per cent on Monday, and oil prices hit their highest since March 28.
But demand for oil likely eased because of the surge in the greenback, which rose to a fresh two-year high. Indeed, the dollar index breached the 101 mark on Tuesday.
A stronger greenback makes commodities priced in dollars more expensive for the currency holders listed on the other side of the exchange rate, dampening demand.
What has not helped is strict COVID-19 restrictions imposed by China to control the spread, even as the country has started to open its factories after shutting them down for nearly three weeks.
Traders will keep an eye on the inventory data due this week and be wary of supply loss from Libya's oil fields.
The Russia-Ukraine war has likely limited crude oil's losses as the prospects of more sanctions on Moscow have increased.