Oil prices fell by more than $1 to near $70 on Monday after Royal Dutch Shell said it was preparing to resume exports from a Nigerian oilfield abandoned over a year ago because of militant attacks.
The news came two days after Nigerian unions ended a general strike that had threatened to halt shipments from Africa's biggest oil producer.
London Brent crude, currently a better indicator of the global market than U.S. oil, was down $1.10 at $70.08 a barrel by 1156 GMT, off a low of $69.91.
It touched a 10-month high of $72.25 early last week on concern the Nigerian strike might disrupt oil exports.
U.S. crude fell $1.08 to $68.06.
Signs OPEC output is creeping higher to take advantage of high prices also helped tip the market lower.
The 10 OPEC members subject to oil production limits are expected to pump 26.8 million barrels per day in June, up from 26.7 million bpd the previous month, said Conrad Gerber, head of Petrologistics, which tracks tanker shipments.
The International Energy Agency, representing 26 industrialized nations, has repeatedly called on OPEC to raise production to take the heat out of prices that have risen from near $50 in January to within striking distance of a record high above $78. OPEC's next scheduled meeting is in September.
Nigeria's biggest foreign operator Royal Dutch Shell said its Forcados oil export terminal may resume operations in July, more than a year after it was shut because of militant attacks. A restart would add to supply of Nigerian crude, prized by refiners as it is easy to process into fuels.
Lower Nigerian output since 2006 has boosted world oil prices and prompted Shell to trim production forecasts. Around a quarter of Nigeria's total production is closed because of violence in the oil producing Niger delta.
There's still a fair bit of production offline. There are some good signs they might sort out these issues, but that's not near term, we're talking months, said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia.
The state of U.S. fuel supplies in the midst of the peak demand summer driving season should also keep prices supported.
Inventories of gasoline and heating fuel are sharply below seasonal norms, and refiners have thus far been unable to crank up output to refill them, U.S. data showed last week.
(We) believe that the continued stress on the U.S. refining system from the adjustment to more stringent product specifications could lead to further refinery outages, posing a downward risk to U.S. refinery runs, said Goldman Sachs.
Since late Friday, Texas refineries operated by Lyondell Chemical Co., Exxon Mobil and Valero all reported upsets, according to regulatory filings.
Speculators took a more bullish view of prices in the week to June 19, lifting their net length in gasoline markets to the highest in three-and-a-half years, while heating oil length rose to its highest since October 2003, data showed on Friday.
NYMEX crude oil speculators also boosted their net length, CFTC data showed.