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 Front-month Brent crude was trading at $44.80 per barrel at
1101 GMT (6:01 a.m. ET), down 31 cents from its last settlement.
U.S. West Texas Intermediate (WTI) futures were down 44 cents at
$43.29 a barrel.
Analysts said the price drops were a result of cashing in after
three weeks of rising prices.
"It's more of a correction since we have no important data today and
we've seen quite some gains in the past few weeks," ABN Amro chief
energy economist Hans van Cleef said.
Market data shows that the amount of open positions betting on
rising WTI prices rose to levels last seen in June 2015 last week,
while bets taken out in expectation of falling prices fell close to
2016 lows.
"Speculative financial investors are likely to take advantage of
this opportunity to take profits after prices rose last week to
4-and-a-half month highs, mainly thanks to their own actions,"
Commerzbank said in a daily note.
Traders also said oil fell on a jump in the dollar on Friday <.DXY>
against a basket of other leading currencies on expectations that
Japan will further extend its aggressive monetary easing through
negative interest rates.
A stronger dollar, in which oil is traded, makes fuel imports for
countries using other currencies more expensive, potentially hitting
demand.
The dollar index was trading a modest 0.2 percent lower on Monday.
Morgan Stanley said that a recent rally was largely fueled by
investment by hedge funds and that the price gains resulting from
these inflows were not supported by fundamentals as production by
the Organization of the Petroleum Exporting Countries (OPEC) was
likely to increase while slowing economic growth, including in
emerging markets, could hit oil demand.
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"A macro unwind (of its positions) could cause severe selling given
positioning and the nature of the players in this rally," Morgan
Stanley said.
Indonesia's governor to the Organization of the Petroleum Exporting
Countries said on Monday that oil at $45 a barrel was "not bad" and
that there would be no urgency to freeze output levels if crude
remained at that price.
Barclays bank analysts said they were "not yet convinced that prices
will remain here or go even higher", however, as fundamentals
remained weak.
"Still-elevated inventory levels, the return of some disrupted
supply, further boosts to Saudi and Iranian supply, and increased
non-OECD product exports all have the potential to move prices lower
over the next several months, especially if broader macro sentiment
shifts," it said.
That said, Monday's oil price decline came despite another cut in
the U.S. rig count which brings activity down for a fifth straight
week to levels last seen in November 2009.
(Additional reporting by Henning Gloystein in Singapore; editing by
Christian Schmollinger and Jason Neely)
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