Oil fell more than 1 per cent on Wednesday as the dollar strengthened in early Asian trade, while an industry report showing a larger-than-expected rise in US crude inventories also dragged on prices.

Crude futures settled up more than 2 per cent on Tuesday when the dollar index posted its biggest fall since early October amid soft US data that cast doubts about the underlying optimism on the outlook for the world's biggest economy.

"The key driver for oil prices in the last few days has been currency fluctuations ... we had seen some weakness in the US dollar which help support prices overnight," Ric Spooner, chief analyst at CMC Markets in Sydney said.

"Oil eased a little bit in the Asian time zone, possibly reflecting the fact that the dollar is a little bit stronger."

Brent crude hit a low of $48.79 a barrel and was down 68 cents at $48.92 by 0255 GMT. US crude was at $45.41 a barrel, down 82 cents, after earlier hitting $45.33.

Brent has traded in a $48-$50 range in the past week, pushed either way by currency changes amid a lack of fundamental news to drive prices.

Investors are looking ahead to official US inventory data due later on Wednesday.

The American Petroleum Institute said late on Tuesday that US crude inventories rose 12.7 million barrels last week, triple the volume expected.

A persistent global supply glut has already dragged down oil prices by around 60 per cent since June last year.

"The overall expectation is that global supply is outstripping demand at the moment and so unless we see some really substantial changes to inventory numbers, oil prices are probably not going to move too much," Spooner said, adding that Brent is supported at $47.60 a barrel in the short term. – Reuters