Investors were also awaiting an expected interest rate hike from the European Central Bank (ECB), a move seen to boost the euro and make dollar-priced oil cheaper.
New York's main contract, light sweet crude for May, fell 45 cents to USD 107.89 per barrel.
Brent North Sea crude for May delivery retreated 55 cents to USD 121.67 after touching USD 122.89 in intraday trade yesterday -- its highest level since Aug 2008 -- before closing at USD 122.22.
"I think it's just a very technical selloff after Brent hit USD 122 which is the highest level since Aug 2008," said Serene Lim, oil and gas analyst for ANZ bank in Singapore.
She added that crude oil traders were looking to the ECB meeting tomorrow, where a hike in the central bank's interest rates was widely expected to be announced.
"The tone of the ECB on further rate hikes may be supportive of the euro and that will be supportive of oil prices," Lim told AFP.
An ECB rate increase would push up oil prices as a stronger European currency would make US dollar-priced crude more attractive, perking up demand.
However, there are also other factors affecting oil trading, including concerns over unrest in the Middle East and North Africa which could disrupt oil supplies coming from the region.