Oil prices retreated Tuesday on continuing worries about the extent of demand growth in the coming year, even amid escalating tensions in the oil-rich Middle East.

By 09:00 ET (14.00 GMT), the U.S. crude futures traded 0.9% lower at $76.13 a barrel and the Brent contract dropped 0.9% to $81.08 a barrel.

The dollar gained against the euro on Monday as investors prepared for the prospect that the Federal Reserve could push back against expectations of an imminent rate cut when it concludes its two-day meeting on Wednesday.

Traders have cut odds that the U.S. central bank will reduce rates in March to 48%, from 89% a month ago, according to the CME Group’s FedWatch Tool, as data reinforces a view that the U.S. economy remains solid.

Oil prices rose for a second week in a row and settled at their highest in nearly two months on Friday as positive U.S. economic growth and signs of Chinese stimulus boosted demand expectations, while Middle East supply concerns added support.

Brent crude futures rose $1.12, or 1.4%, to settle at $83.55 a barrel, their highest close since Nov 30. U.S. West Texas Intermediate crude (WTI) (CLc1) climbed 65 cents or 0.8% to $78.01, also the highest close since November.

The U.S. dollar steadied in early European trade Friday after gains on the back of strong U.S. growth data, while the euro retreated in the wake of the latest European Central Bank meeting.

At 03:50 ET (08:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded flat at 103.372, on course for a small weekly gain after climbing about 0.2% overnight.

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The U.S. dollar dropped on Wednesday, taking a breather from recent gains, as investors consolidated positions and looked to economic data this week and the Federal Reserve policy meeting next week for more clues about the start of the easing cycle.

The currency, however, cut its losses after data showed business activity in the world's largest economy picked up in January and a measure of inflation eased. A gauge of prices charged by companies for their products fell to the lowest level in more than 3-1/2 years, data showed.

Gold prices demonstrated a slight increase in the face of a declining U.S dollar, with spot gold rising to $2,026.95 per ounce, while gold futures also experienced a rise, closing on COMEX at $2,028.60 per ounce. The precious metals market also saw both platinum and silver experiencing an uptick in value, with silver reaching $22.47 an ounce.

Oil prices settled lower on Tuesday as traders focused on rebounding crude output in parts of the U.S., along with rising supply in Libya and Norway, rather than risks to supply posed by conflict in Europe and the Middle East.

Brent crude settled at $79.55 a barrel, losing 51 cents, or 0.6%. U.S. West Texas Intermediate crude settled at $74.37 a barrel, shedding 39 cents, or 0.5%.

The U.S. dollar edged lower in early European trading Friday, but was on track for a second consecutive weekly gain on renewed doubts over early rate cuts by the Federal Reserve, while weak retail sales hit sterling.

At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.212, but is up over 1% so far this week.

Oil prices settled lower Friday, but eked out a gain for the week as elevated Middle East tensions and a healthier demand outlook overshadowed worries about the impact of slowing global growth.     

By 14:30 ET (19:30 GMT), the U.S. crude futures settled 0.9% lower at $73.41 a barrel, though still ended the week in the green, while the Brent contract settled 54 cents lower at $78.56 a barrel.