Brent North Sea crude for February delivery fell 32 cents to $49.30 a barrel after closing $2.71 higher at $49.62 on Tuesday in London.

Israeli troops invaded the Gaza Strip on Saturday after an eight-day bombing operation, in a bid to halt rocket fire from the militant group Hamas.

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At least 555 people have been killed in Gaza since December 27, according to doctors, and another 2,700 wounded, while four Israeli soldiers have died in the fighting since Saturday.

Another four Israelis were killed in Hamas rocket attacks on Israel before the ground war began. But dealers said they did not expect prices to continue their rally despite the conflict in the oil-rich Middle East.

"Even though the short-term geopolitical issues of Gaza are keeping the strength in oil, continuing poor economic sentiment will put a lid on prices," said Victor Shum, a senior analyst at international energy consultants Purvin and Gertz in Singapore.