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Oil prices fell about a dollar on Monday, unwinding steep gains last week that were spurred by mounting expectations of a second Opec supply cut and as colder weather began to eat into US fuel stocks.
US crude was trading 90 cents lower at US$62.53 a barrel by
1759 GMT after dropping as low as US$61.90. London's Brent crude was 95 cents lower at US$63.67.
"The run up that we had was too much, too soon," Olivier Jakob of Petromatrix said.
US crude hit a 17-month low of US$54.86 on Nov. 17, but then recovered. It climbed by around US$4 last week and reached a peak of US$63.82 early on Monday, the highest since Sept. 28.
Most Opec ministers have said they still see the need for a further output cut when the Organisation of the Petroleum Exporting Countries meets in Abuja next week and that, regardless of price, the market is oversupplied.
The group already agreed to reduce supplies by 1.2 million barrels per day from Nov. 1.
A weak dollar, which on Monday was recovering from 20-month lows against the euro, has helped to drive buying across the commodities complex as dollar-denominated assets are relatively cheap.
But it has also eroded the purchasing power of producer countries and could encourage them to seek a higher oil price.
"The dollar is not helping. It affects revenue. If there is a significant drop, it is of concern to us," United Arab Emirates' Oil Minister Mohammed al-Hamli told Reuters.
Some analysts have said, however, Opec could be more worried about the forecasts of economic weakness in the United States, the world's biggest oil consumer, that have contributed to the dollar's slide.
A weaker US economy would impact oil demand and lower oil prices, although in the immediate term, tightening inventories could provide some support.
US oil inventories are higher than a year ago, but a fall in heating fuel stocks last week helped to drive last week's price rally as colder weather began to bite.
After a cold spell this week, the US National Weather Service was forecasting above-normal temperatures next week, including in the US Northeast, the biggest heating oil consumer.
- REUTERS