Benchmark oil for October delivery was down 76 cents to $86.51 in the early afternoon, European time, in electronic trading on the New York Mercantile Exchange. Crude rose $1.90 to settle at $87.27 on Monday.
In London, Brent crude for October delivery was down 58 cents at $111.30 on the ICE Futures exchange.
Financial markets turned lower on Tuesday after a European survey showed business and consumer confidence fell more than expected in August. That reinforced fears that economic growth will continue to slow in coming months.
Traders will watche the open on Wall Street for a reaction from investors in the U.S., where economic indicators have been stronger this week.
On Monday, the Commerce Department said consumer spending, which accounts for 70 percent of the nation's economic activity, increased in July by the biggest amount in five months.
Crude has jumped 16 percent from near $76 three weeks ago amid growing investor optimism the U.S. economy may not slip into recession in the second half.
Some analysts expect crude to head lower, however, as slowing global economic growth pinches oil demand.
"We still look for weak global demand to win out over the longer term eventually forcing the oil market into fresh low territory," energy consultant Ritterbusch and Associates said in a report.
In other Nymex trading for October contracts, heating oil rose 0.8 of a cent to $3.01 per gallon and gasoline futures gained 0.6 of a cent to $2.76 per gallon. Natural gas slid 0.7 of a cent to $3.82 per 1,000 cubic feet.