Forecasts that U.S. crude inventories have increased for a second week weighed on oil prices as well.
Crude oil for June delivery lost 3.12 dollars, or 2.6 percent, to end at 115.63 dollars a barrel on the New York Mercantile Exchange.
A stronger dollar gave investors another reason to sell crude Tuesday. Commodities such as oil are less effective hedges against inflation when the dollar is gaining ground, and a stronger greenback makes oil more expensive to investors overseas.
A monthly Energy Department report said that demand for finished petroleum products dropped 8.5 percent in February from January, and demand for gasoline fell by 6.2 percent, which suggests high prices are cutting American's appetite for fuel, analysts said.
At the same time, a British refinery strike that raised concerns about supplies ended Tuesday, and analysts surveyed by Platts expect the Energy Department's weekly inventory report on Wednesday to show domestic crude supplies rose last week.
