Oil plumbed five-week lows below $88 a barrel on Monday as concerns about the health of the U.S. economy extended losses that have cut 10 percent from prices over the past two weeks.
U.S. crude fell 81 cents to $87.90 a barrel at 1:30 p.m. EST, after trading down to $87.14 earlier, well off the record high of $99.29 a barrel hit on November 21. Brent crude traded down 12 cents to $88.14 a barrel.
Oil's record rally was clipped by worries over the weakening economy in the United States and the restart of the giant Canada-U.S. Enbridge pipeline, which carries 10 percent of the world's top consumer's crude imports, following a fire last week.
The slide comes as the Organization of the Petroleum Exporting Countries gathers in Abu Dhabi to decide on output policy.
The market will be very focused on Wednesday's OPEC meeting, but we believe they are unlikely to do anything, said Mike Wittner of Societe Generale. They have the same concerns as the market -- the possibility of weakening economic growth led by the United States.
Consuming nations have urged OPEC to pump more oil to help temper shrinking inventories ahead of the Northern Hemisphere winter and to stem prices.
But OPEC ministers, who agreed this year to hike output by 500,000 barrels per day effective November 1, insist oil's surge to record highs had been driven by speculators and not by a shortfall in supplies.
There is absolutely ample supply, Ali al-Naimi, Saudi Arabia's influential oil minister, said.
Prices slumped by $9.47 a barrel last week, the biggest nominal weekly loss ever, on the prospect of an OPEC output increase, U.S. economic fears and a rebound in the U.S. dollar.
The weak dollar has contributed to the rise that rocketed oil up about 40 percent from August to late November, before the U.S. greenback showed signs of bottoming out.
A Reuters poll early last week showed analysts expected another 500,000 bpd increase from OPEC, although oil's tumble since then may have clouded the picture.
The price collapse of last week could be seen as a lesser incentive for Saudi Arabia to sponsor a new increase, said Olivier Jakob of oil consultant Petromatrix.
OPEC's November production levels, excluding Iran and Angola, failed to reach the target set in September, when the cartel agreed to increase supplies by 500,000 bpd, a Reuters survey found.