Oil prices fell over a dollar on Monday, dragged down by fears of an escalating fallout in top energy consumer the United States from the subprime crisis and by easing tensions in the Middle East.
U.S. light crude for December delivery fell $1.17 to $94.76 a barrel by 0320 GMT, partially reversing previous session's $2.44 surge.
London Brent crude fell 80 cents to $91.28.
Top U.S. bank Citigroup Inc (C.N: Quote, Profile, Research) said on Sunday it may write off up to $11 billion of subprime mortgage losses, on top of a $6.5 billion write-off last quarter, and also announced the departure of its chairman and chief executive.
News of Citigroup's further writedown raised fresh concerns about the health of the U.S. economy and reignited fears of slowing energy demand growth, said Tony Nunan, risk manager for Mitsubishi Corp in Tokyo.
Everyone is afraid of a U.S. economic slowdown and the latest news from Citigroup has got the market worrying about the economy again, Nunan said.
Analysts said oil prices, which hit a record $96.24 on Nov 1, were also pushed down by easing tensions in the Middle East.
Iraq said on Saturday it was ready to hunt down and arrest Kurdish guerrilla leaders responsible for cross-border raids into Turkey in an effort to avert a major incursion by the Turkish military.
The move has helped to diffuse simmering tensions between Turkey and Iraq, where a border row between the two countries has helped oil's 18 percent surge in the past month due to fears that a Turkish attack could escalate into a wider regional crisis.
Concerns about tight supplies ahead of the northern hemisphere winter and rising speculator interest have also contributed to oil's recent bull-run.
Signs of easing tensions between major oil producer Iran and the West also contributed to oil's losses. Iran said on Sunday it welcomed proposals to work with other countries to enrich uranium, but will not accept an offer that requires Tehran to halt its sensitive atomic work.
Saudi Arabia's foreign minister said this week U.S.-allied Gulf states were willing to set up a body to provide enriched uranium to Iran to defuse Tehran's standoff with the West.
Speculators on the New York Mercantile Exchange crude oil market increased their net long positions in the week to October 30, data from the U.S. Commodity Futures Trading Commission showed on Friday.
The rise came as U.S. oil prices hit fresh records last week, driven by concerns about supplies ahead of the U.S. winter and the weaker dollar.
Separately, Valero Energy Corp's (VLO.N: Quote, Profile, Research) 135,000 barrel per day (bpd) Los Angeles-area refinery in Wilmington, California, reported a unit shutdown on Friday afternoon, while Citgo Petroleum Corp plans to start a 45-day overhaul on the 45,000 barrel per day (bpd) delayed coking unit Corpus Christi, Texas, refinery in January.