Oil prices fell sharply this evening as the dollar rose and disrupted Nigerian supplies were expected to resume following a deal with unions to end a workers' strike.

US crude fell for the third day, dropping by $2.53 to $110.95 a barrel. London's Brent was $2.22 lower at $109.14.

On Wednesday US crude fell about $2 after US government data showed a large increase in its crude oil reserves.

The dollar rose to a one-month high against the euro and was heading toward a two-month high against the yen. In recent weeks, the dollar's weakness had boosted oil, as it made the commodity cheaper for buyers with other currencies.

In Nigeria, Exxon Mobil reached a deal with a Nigerian oil union to end an eight-day-old strike which had shut in virtually all the US oil major's production in the West African country, a union leader said