SINGAPORE -- Oil fell more than $1.00 towards $123.00 a barrel Tuesday on profit-taking after a fall in China's oil imports in April, the first on-year drop in 18 months, raised questions over demand in the world's second largest oil consumer.

US light crude for June delivery dropped 98 cents at $123.25 a barrel by 0455 GMT, after earlier falling to as low as $123.10. It had settled Monday down a hefty $1.73 after striking a new intraday record high of $126.40.

London Brent crude fell 92 cents to $121.99.

"When news like the Chinese imports comes out, it makes sense to take profit. But is demand really killed or only rationed? It will take a lot of damage to revise the overall trend," said Tony Nunan, risk management executive with Tokyo-based Mitsubishi Corp.

China's April crude oil imports fell by 3.9 percent from a year ago to 3.47 million barrels per day (bpd), and were also down from the record of 4.07 million bpd in March, official Chinese data showed.

The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up six-fold since 2002.

But analysts said the dip in Chinese imports may be a one-off adjustment, as refiners ran down stocks after unusually high March purchases.

Following quick growth in the first quarter, year-to-date imports are still up 9.8 percent on a year earlier.

Traders also tried to assess the impact of a strong earthquake in the southwestern province of Sichuan, where the death toll neared 10,000.

PetroChina has suspended oil flows at a major fuel pipeline to check for possible damage after a powerful earthquake hammered southwest China, company sources said.

A prolonged halt at the pipeline that supplies most of the fuel to the quake-hit region could force production cuts at the 200,000 bpd Lanzhou refinery, the largest in western China, sources said.

Supply disruptions in the North Sea and a weak dollar helped push oil prices up more than 10 percent since the beginning of the month, while a still weak dollar has sent investors scurrying for dollar-denominated commodities such as oil.

Weekly US inventory data to be released Wednesday will provide further direction to the market after an unexpected fall in distillates stocks, which include heating oil and diesel fuel, pushed prices to new highs last week.

US crude oil inventories are expected to have risen for a fourth-straight week, by an average 1.9 million barrels on an uptick in imports, while products stocks would also rise, helped by an increase in refinery utilization, a preliminary Reuters poll of analysts found. Distillate supplies were expected to have risen 1.0 million barrels. Gasoline stocks were seen posting a small increase of 300,000 barrels.