Oil falls below $53, dealers eye U.S. stockpiles

U.S. light crude for May delivery fell 81 cents to $52.99 a barrel by 1:30 p.m. EDT, reversing direction after Monday's climb to a near three-month high. London Brent crude fell 47 cents to $53.00 a barrel.

"It's still difficult to make a strong case for a continued move up in crude in the face of poor underlying fundamentals," Nauman Barakat, senior vice president at Macquarie Futures USA, said in a note.

Analysts said they expected oil inventory data to be released by the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday would show a 1.1 million barrel build in crude stockpiles.

Energy demand in the world's biggest consumer has been hard-hit by the economic meltdown, buffering inventory levels, and global consumption has been shrinking for the first time in a quarter century.

Adding pressure, the dollar rose against the yen and the euro as currency investors bet a U.S. plan to remove bad loans from banks' balance sheets would do a lot to help the U.S. economy to recover.

A stronger dollar can hit commodity prices by reducing the purchasing power of buyers using other currencies.

Oil prices have climbed from under $33 last December, partly due to aggressive supply cuts from OPEC, but remain almost $100 below last summer's peak.

Oil prices also took a hit after media reported Tuesday that China's refined fuel stocks rose 11 percent in February despite a sharp post-holiday rebound in domestic sales, suggesting demand in the world's No. 2 consumer may be weaker than thought.

A strike by oil workers in Brazil entered its second day Tuesday, but output from South America's second-biggest oil producer was unaffected according to state oil company Petrobras.

Meanwhile, Nigerian oil unions on Tuesday called off plans for a workers' strike this week after the government promised to do more to improve security in the restive Niger Delta.

(Editing by John Picinich)