Brent crude oil fell more than $1 on Tuesday after nearly reaching a month's high, as weak fundamentals curbed early gains spurred by strong German data and tension in the Middle East.
Fears of supply disruption after the Israeli air strikes on Syria close to Damascus sent Brent close to $106 early in the trading session and left the market overextended after its largest three-day rally since August 2012.
Those fears subsided and Brent fell in the absence of clear signs of strengthening global demand, traders said. In a monthly report, the U.S. Energy Information Administration cut its forecasts for oil consumption in 2013 and 2014 due to declines in Europe and Japan.
"We're getting into an area where we've had such a strong run-up in price over the past few days, when really from a fundamental standpoint it's hard to justify. We got up here on a lot of froth," said Stephen Schork, editor of The Schork Report in Pennsylvania.
Brent crude fell $1.06 to settle at $104.40 a barrel, having earlier reached $105.94, its highest since April 11. Brent has rebounded over $5 a barrel since falling below $99 last Wednesday.
U.S. oil futures lost 54 cents to settle at $95.62.
The spread between Brent and U.S. crude largely traded in a range between $9 and $10 throughout the session. It widened out to above $10 early on before settling at $8.78.
Traders are watching for the startup of the 405,000-bpd BP Whiting refinery in Indiana which was estimated to come back online by the end of June. Industry group Genscape reported weak heating from both of the refinery's furnace stacks, indicating possible testing.
Positive data on German industrial orders rising again in March helped to lift prices in earlier trading.
Oil prices trended lower beginning around 10 a.m. EDT (1400 GMT), tracing losses on the S&P 500 and the Dow Jones industrial average. But they parted ways with equities around 11 a.m. EDT (1500 GMT) as stocks rallied to intraday highs, led by gains in the materials and energy sectors.
Traders expected a further build of U.S. crude stocks in Tuesday's report from the American Petroleum Institute and Wednesday's more closely watched report from the U.S. Energy Information Administration.
A preliminary Reuters poll forecast on average that crude stocks increased 1.8 million barrels in the week ended May 3.
Attention focused again on China, the world's second-largest economy, ahead of preliminary April trade data due on Wednesday.
China's crude oil imports last month were expected to have held near March levels, which were 2.1 percent lower than a year earlier.
Chinese inflation data on Thursday and money supply and loan growth figures expected Friday will also be watched.
(Additional reporting by Robert Gibbons in New York, Simon Falush in London; editing by Jim Marshall)