Prices hit an intraday seven-week high on Monday, before ending lower after forecasts indicated that Tropical Storm Alex would skirt the Gulf of Mexico's main production centers.

At 12:50 p.m. (1650 GMT), US crude for August was down $2.55, or 3.26 percent, at $75.70, having tumbled as low as $75.28 per barrel.

ICE Brent crude fell $2.34 to $75.25.

"It is a return to risk aversion," said Eugen Weinberg, a commodity analyst at Commerzbank in Frankfurt. "Gold is outperforming other commodities, a sign of a move to safe havens, and base metals are down on worries over the economy."

"The oil market is no longer worried about Tropical Storm Alex as it looks like it will avoid oil facilities."

Oil declined along with equities and the euro on concerns about whether Europe's banks can repay 442 billion euros ($545.5 billion) to the European Central Bank.

Adding to concerns about economic growth and demand for oil, the Conference Board corrected its leading economic index for China to a 0.3 percent gain in April rather than the 1.7 percent rise earlier reported.

The dollar's strength added pressure to the commodities complex. A stronger dollar often weighs on commodity markets, but that correlation has proved erratic this year.

On Tuesday, the Reuters-Jefferies CRB index, a global commodities benchmark, fell to a two-week low.