LONDON: Brent crude eased slightly, paring an early fall on Tuesday, as the dollar held steady but unexpectedly high Chinese crude imports indicated demand was resilient.
"The big thing driving oil at the moment is a stronger dollar... there are going to be excuses to take it up or downwards but what we're trying to do now after these big moves is to get the market back into some kind of trading range," said David Morrison, a strategist at GFT.
Brent was 38 cents lower at $115.52 a barrel at 0817 GMT on Tuesday, recovering from a low of $113.58 earlier in the session.
US crude was 92 cents lower at $101.62 a barrel, after sliding by more than 2 percent on Tuesday.
Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24 million barrels of crude oil per day (bpd), up 1.7 percent on the year, official Customs data showed on Tuesday.
Resilient Chinese demand for crude oil is a double-edged sword analysts say, as signs of economic strength balance against prospects of another round of economic tightening in China.
"People are still trying to figure out how much monetary tightening will play a role in slowing growth over the next quarters," said Jeremy Friesen, commodity strategist at Societe Generale.
Imports of oil products, a big portion of which is often made up of fuel oil, fell 17.0 percent from a month earlier to 3.22 million tonnes in April, the customs data showed.
"High oil prices have cut into operations of some small refineries and so there was less need for feedstocks," an oil product trader said.
MARGINS
CME Group Inc, the world's largest commodities exchange, raised the margin call on crude futures for a fourth time since February in an effort to curb volatility, triggering a brief drop in oil prices on Tuesday.
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank
The cumulative increase in margins to maintain positions on US crude benchmark West Texas Intermediate traded on NYMEX since February is 67 percent, with the cost rising to $6,250 per contract from $3,750.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default and are based on the largest most-likely daily market move.
CME's move comes after a volatile week of oil trading that saw US crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel.
The Chicago Board Options Exchange's oil volatility index soared to the highest in almost a year during Thursday's rout, touching 48.64.
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