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US oil settles down 52 cents, or 0.9%, at $57.51 a barrel

An oil well owned an operated by Apache Corp. in the Permian Basin, Garden City, Texas.
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An oil well owned an operated by Apache Corp. in the Permian Basin, Garden City, Texas.

Oil came under pressure on Wednesday as a resurgent dollar weighed on crude prices ahead of inventory data expected to show whether fuel demand was accelerating with the peak U.S. driving season under way.

U.S. crude closed down 52 cents, or 0.9 percent, at $57.51 a barrel, having seesawed between negative and positive territory throughout the session.

North Sea Brent crude was down $1.70, or 2.60 percent, at $62 a barrel, after rising nearly $1 earlier in the session.

The American Petroleum Institute (API), an industry group, will issue estimates on crude and oil products in storage at 4:30 p.m. EDT ahead of Thursday's official data from the U.S. government.

Analysts polled by Reuters forecast on the average a 2 million barrel draw in crude stocks last week, marking a fourth consecutive week in inventory declines. But some traders think crude stocks may have actually risen last week even as demand for gasoline picked up.

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"If you're looking for a catalyst for price recovery from this data, you may not really get it, and that's why the dollar's been exerting it's strength over oil," said John Kilduff, a partner at New York-based commodities fund Again Capital.

Oil prices had fallen nearly 3 percent the previous day, also pressured by a rally in the dollar.

The dollar rose against major currencies on Wednesday on expectations the Federal Reserve would raise interest rates later this year on signs of a U.S. economic recovery from an anemic first quarter. A stronger greenback makes dollar-denominated commodities, including oil, less affordable for users of other currencies.

"We are hostages a little bit to the swings in the currency markets," said Ole Hansen, head of commodity strategy at Saxo Bank.

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API's inventory estimates are delayed from their routine Tuesday release because of the U.S. Memorial Day holiday on Monday. The government's Energy Information Administration will also publish a day late, at 11 a.m. EDT (1500 GMT) on Thursday.

Kilduff said he expects crude stocks to have risen by about half a million barrels last week in spite of a 2 million-barrel draw in gasoline.

Chicago-based Ritterbusch & Associates, a contributor to the Reuters poll, expects a crude build of nearly 2 million barrels and a gasoline draw of 0.8 million barrels. Citi Futures forecast a 2.5 million barrel draw in crude and a 1 million barrel build in gasoline.