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Brent crude futures for April, which expire on Friday, fell 99
cents, or 1.4%, to $65.89 a barrel by 1203 GMT. The more
actively traded May contract slipped by $1.19 to $64.92.
U.S. West Texas Intermediate (WTI) crude futures dropped $1.27,
or 2%, to $62.26.
A sell-off in bond markets lifted the U.S. dollar, making
dollar-priced oil more expensive for holders of other
currencies.
Friday's gains also reflect profit-taking after both Brent and
WTI headed towards monthly gains of about 20% on supply
disruptions in the United States and optimism over demand
recovery on the back of COVID-19 vaccination programmes.
Investors are betting that next week's meeting of the
Organization of the Petroleum Exporting Countries (OPEC) and
allies, a group known as OPEC+, will result in more supply
returning to the market.
"Oil prices have gone too far and too fast. Brent is above
pre-pandemic levels even though global oil demand is still
playing catch-up," PVM analysts said.
For all the talk of tightening fundamentals, the demand side of
the market is nowhere near warranting current oil price leves,
they added.
U.S. crude prices also face pressure from the loss of refinery
demand after several Gulf Coast facilities were shuttered during
the winter storm last week.
Refining capacity of about 4 million barrels per day (bpd) is
still shut and it could take until March 5 for all shut capacity
to resume, though there is risk of delays, analysts at J.P.
Morgan said in a note this week.
(Additional reporting by Sonali Paul in Melbourne and Koustav
Samanta in Singapore; Editing by David Goodman)
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