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 Investors also awaited direction from the new head of the U.S.
Federal Reserve on the course of the central bank's monetary policy.
Intense and relentless cold has propped up oil prices as demand for
heating fuels skyrocketed and refiners pumped out distillates.
Temperatures in large cities are expected to moderate next week,
curbing demand for heating fuels, even as another snowstorm is
expected in the U.S. Northeast this week.
U.S. natural gas prices lost more than 4 percent on Monday. U.S.
heating oil futures slipped 1.7 percent to settle at $2.9981 per
gallon, pressured by weak diesel cash prices that also weighed on
oil, said Stephen Schork, editor of the Schork Report in Villanova,
Pennsylvania.
"This is a lack of follow through from Friday's spike, coupled with
weak cash markets," Schork said. "People are just bailing on crude
right now.
March Brent crude settled 94 cents lower at $108.63, after reaching
a high of $109.75, its loftiest since Jan. 2. The March contract
expires at the end of trading on Thursday. Brent oil for April
settled 89 cents lower at $107.96.
U.S. crude ended 18 cents higher at $100.06, maintaining above $100
for the first time this year.
The spread between the two benchmarks widened earlier in the session
to $10 for the first time in a week, then narrowed to settle at
$8.57 per barrel <CL-LCO1=R>.
Traders and analysts polled by Reuters expect government data to
show a large 3 million barrel build in U.S. crude oil inventories as
U.S. refiners look ahead to the end of winter and enter maintenance
season, curbing demand for oil.
Distillate stocks were expected to have fallen by 2.3 million
barrels, reflecting steep demand for heating fuels last week.
In the meantime, Fed chief Janet Yellen delivers her first testimony
to Congress this week and markets expect her to indicate she will
stay the course on tapering the Fed's bond buying program.
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The Fed has been cutting its bond purchases by $10 billion a month
as the U.S. economy has strengthened. The bond buying program has
provided support for commodity and equity markets.
In Europe, output at Britain's Buzzard oilfield returned to a normal
rate of 200,000 barrels per day (bpd).
Buzzard, Britain's largest oilfield, will undergo a total nine weeks
of maintenance in 2014, far more than the two weeks traders had
expected. Lower North Sea loadings for March could also be
interpreted as less demand for crude, which would weigh on Brent
prices, analysts said.
Increased output from Libya, which was exporting 450,000 bpd, also
pressured prices.
An easing of political tension over Iran's nuclear program could
weigh on oil as supply from the OPEC producer may rise if Tehran
reaches a final deal with world powers. Iran and six world powers
are due to start a final round of talks on Feb. 18 that is aimed at
reaching a broad diplomatic settlement.
Iran's military successfully test-fired two new domestically made
missiles, one of them a long-range ballistic missile, the defence
minister said on Monday, according to state television.
(Additional reporting by Christopher
Johnson in London and Florence Tan in Singapore; editing by Dale
Hudson, Jane Baird, Marguerita Choy, Peter Galloway and Chizu
Nomiyama)
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