By Alex Lawler LONDON (Reuters) - Oil fell more than 3 percent to $68 a barrel on Wednesday, reversing some of the previous day's surge, after Barack Obama's victory in the U.S. presidential election boosted the dollar. Markets had rallied sharply on Tuesday, partly on anticipation of the victory, which some analysts said should help extend the U.S. dollar's recovery. "Prices have slipped back overnight as we were overdone on the upside yesterday, and we're seeing a stronger dollar on the back of the Obama victory," said Rob Laughlin of MF Global. U.S. crude fell $2.35 to $68.18 a barrel by 1127 GMT, having fallen as low as $67.06 earlier in the session. London Brent crude lost $2.16 to $64.28. The dollar -- which posted its biggest one-day slide against the euro since that currency's 1999 launch on Tuesday -- rebounded against major currencies on Wednesday, rising more than 1 percent against the euro. As oil is traded in dollars, a firmer dollar makes oil more expensive for holders of other currencies and tends to pressure the price of crude lower. Oil traders' focus later in the day is likely to turn to weekly U.S. oil inventories, with crude oil stocks expected to rise by 1.1 million barrels last week. Crude prices have fallen by about half from a record high of $147.27 a barrel in July as the global credit crisis hit the wider economy, dampening fuel demand in major consumer nations. Oil had surged $6.62 or 10.36 percent on Tuesday, the largest one-day gain since September 22, on signs that Saudi Arabia and other OPEC members had made cuts in oil exports. Saudi Arabia has reduced exports after the Organization of the Petroleum Exporting Countries agreed last month to lower output, trade sources said. Fellow OPEC member Angola said on Wednesday it had implemented its share of the supply curbs. (Reporting by Alex Lawler in London and Fayen Wong in Perth, editing by Anthony Barker)

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