Oil broke a five-day rally on Tuesday, although prices were supported near $80 by ongoing strikes by French oil workers, which could close over half of the country's refining capacity.
U.S. crude futures for April fell 37 cents to $79.94 a barrel by 0934 GMT. The March contract, which expired on Monday, hit $80.51 during the day, the highest for a front-month contract since Jan. 13.
Brent crude was trading 36 cents lower at $78.25.
Strikes at Total's refineries have entered their seventh day as workers protest against the French company's plan to shut one of its six refineries permanently because of weak demand for fuel. Output has stopped at all the refineries.
Workers at Exxon's two French refineries have voted for sympathy walk-outs.
The widespread strikes have drawn in President Nicolas Sarkozy, who met Total Chief Executive Christophe de Margerie on Tuesday morning. Earlier the government called for motorists to remain calm.
Drivers rushed to pumps while petroleum industry body UFIP said on Monday France had around seven days of fuel supply.
Analysts said the strikes have raised concern over fuel supply shortages, which pushed up oil product prices and supported crude oil futures, although refinery stoppages in general translate into lower demand for physical crude oil.
"I see the market staying relatively high due to this French strike concern," Andy Sommer, an energy market analyst with EGL in Switzerland. "We do not know how quickly fundamentals will tighten, or how long it will last."
ICE gas oil futures, the European benchmark for diesel and heating fuel, and New York RBOB gasoline futures held steady. Total often exports gasoline to the United States.
Later in the day, market focus will shift to oil data for the week to Feb. 19 from U.S. industry group the American Petroleum Institute (API) at 2130 GMT.
Analysts in a Reuters poll expected a 1.9 million barrel increase in crude inventories for the week in the United States, the world's largest oil market.
Inventories middle distillates, including heating oil, were likely to fall due to high heating demand amid the extended cold in the U.S. Northeast.
The dollar was broadly weaker but the euro pared gains agains the U.S. currency after a closely watched German sentiment survey came below forecasts.
