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The dollar rose 0.3 percent against a basket of
currencies, making dollar-traded commodities such as crude oil
more expensive for holders of other currencies.
"The recent U.S. dollar strength weighed on market sentiment and
prompted investors to lock in recent gains," said Myrto Sokou,
senior analyst at London-based Sucden Financial.
Brent fell 20 cents to $65.08 a barrel by 1145 GMT (7.45 a.m.
ET), having touched $65.61 earlier in the session.
U.S. crude, called WTI, was down 4 cents at $57.11 a barrel,
after touching $57.46.
The number of active U.S. rigs drilling for oil has fallen for a
record 20 weeks in a row to the lowest since 2010, according to
data from oil services firm Baker Hughes, fuelling expectations
of a drop in U.S. production.
Fighting in Yemen raged on as Saudi Arabia continued its air
strikes against Houthi militia forces in Aden.
While Yemen itself is not among the biggest oil producers in the
region, Gulf producers ship oil along the Gulf of Aden on
Yemen's southern coast and through the narrow straits of Bab el-Mandeb,
between Yemen and Djibouti.
Analysts at Bank of America Merril Lynch raised their oil
forecast for Brent and WTI.
"The market seems to have found a spot price low, and we lift
our end of 2Q15 targets for WTI and Brent to $59 and $63 a
barrel," they said in a note on Monday.
"We revise up our 2016 Brent forecasts to $62 from $58, but
remain bearish relative to the forward due to the big oil
overhang."
Prince Abdulaziz Bin Salman Bin Abdulaziz, the deputy oil
minister of Saudi Arabia, said on Monday that the kingdom's high
oil production policy was based on the status of global demand.
Speaking to reporters in Saudi Arabia, the world's top oil
exporter, he said the market was "excellent" and that Riyadh was
keen to maintain its market share.
Hedge funds and other money managers raised their bets on rising
Brent crude oil prices LCOc1 for a fifth week in a row to a new
record, exchange data showed on Monday.
(Additional reporting by Florence Tan in Singapore; Editing by
Dale Hudson and William Hardy)
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