US crude for April delivery fell 16 cents to US$109.76 a barrel, hovering below the all-time peak of US$110.20 hit on March 12, the sixth straight record high.

London Brent crude fell 17 cents to US$106.10, off the record US$106.45.

The dollar dropped to a 12-year low against the yen and a record low versus the euro on March 13 amid uncertainty about the long-term impact of the Federal Reserve's efforts to ease strained credit and money markets.

Investors have rushed into commodities over the past month to hedge against inflation and the softening dollar, lifting oil to new highs despite concerns over a recession in top oil consumer the United States and rising fuel inventories. But oil prices reacted on Wednesday after US government data showed that crude stocks rose more than expected last week, dipping more than a dollar after the report.

Crude supplies rose by 6.2 million barrels to 311.6 million barrels in the week to March 7, well above forecasts by analysts for a 1.7 million barrel build, while gasoline stocks hit a 15-year high.

While the rising US inventories weighed on oil prices, fresh concerns over supply disruptions in Nigeria provided additional support.

The risk of renewed violence in Nigeria's oil producing Niger Delta is increasing because militants are frustrated by a lack of concrete results from peace talks, a key negotiator said on Wednesday. The Niger Delta is home to the world's eighth-biggest oil industry, exporting about 2.1 million barrels per day.