Still, a weak dollar and a belief that supplies are tight limited oil's decline.

Light, sweet crude for December delivery fell $1.53 to $92 a barrel on the New York Mercantile Exchange. The contract settled at a record $93.53 a barrel Monday, after rising as high as $93.80, a new trading record.

Monday's price surge was largely driven by news that Mexico's Petroleos Mexicanos, or Pemex, was to temporarily halt as much as 600,000 barrels of daily crude production, or one-fifth of its output, due to stormy weather. But concern over the disruption of supply from Mexico was easing, analysts said.

"It looks like the production will resume in a matter of days so it's only a temporary disruption," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Meanwhile, ministers from Organization of Petroleum Exporting Countries sent conflicting signals about the cartel's plans for its production levels; an increase in production could send prices lower.

OPEC's president, Mohamed al-Hamli, said the group "will do what we can" to meet changes in supply and demand, adding: "We're concerned about the high level of prices."

But Libya's oil policy head and chief executive of its National Oil Co., Shokri Ghanem, said OPEC ministers weren't discussing any proposals to inject further crude into global oil markets, insisting such a move would do nothing to cool record prices.

Oil prices could get another boost this week if the U.S. Federal Reserve cuts interest rates at its two-day policy meeting that ends Wednesday.

"What the U.S. Federal Reserve will do in terms of interest rates will be something that traders will watch," Shum said. "If indeed there is a rate cut, it may further weaken the U.S. dollar."

A lower dollar tends to lift commodities prices, in part because they are priced in dollars and therefore become more attractive to buyers.

Shum said Tuesday's decline in crude prices was due mostly to profit taking after the previous session's record highs. But several factors continued to support oil prices, he said, such as the upcoming Northern Hemisphere winter season and concerns about inadequate supplies.

Prices have also been supported by fighting in Turkey between armed forces and Kurdish rebels, and the U.S. government's imposition last week of harsh penalties against Iran, the world's fourth-largest oil producer.

Nymex gasoline prices dropped 2.84 cents to $2.2990 a gallon, while heating oil futures lost 1.48 cents to fetch $2.4498 a gallon.

In London, Brent crude futures fell $1.20 to $89.12 a barrel on the ICE Futures exchange.

Despite oil's relentless march higher in recent weeks, many analysts argue that the price increases are being driven by speculation, not market fundamentals. News headlines out of Turkey, Iran and, on Monday, Mexico, contribute to this buying frenzy, these analysts argue.

Associated Press writer Gillian Wong in Singapore contributed to this report.