U.S. oil slid below $95 on Monday after top exporter Saudi Arabia said OPEC would look at raising output to brake oil's ascent towards $100 and safeguard world economic growth.
At 9:00 a.m. EST U.S. crude was down $1.72 at $94.60. U.S. oil struck a record high of $98.62 a barrel on November 7 as the dollar plumbed new lows.
London Brent crude was down $1.28 at $91.90.
Goldman Sachs analysts noted that U.S. crude had been locked in a range centered on $95 for the past two weeks. At the same time, price swings of more than $2 a day had become the norm.
The high volatility and range-bound price action are indicative of the uncertainty that has characterized the oil market in its search for a new equilibrium, the bank said.
We maintain that the current high price environment will likely prompt a cyclical rebalancing by the first quarter of next year as a result of a likely increase in OPEC production and some further demand softening.
Saudi Oil Minister Ali Al-Naimi Saudi Arabia said on Sunday the exporter group would discuss increasing output. OPEC agreed in September to boost supplies by 500,000 barrels per day.
OPEC heads of state, accompanied by their oil ministers, will gather in Riyadh for a summit this week. The next scheduled OPEC meeting to set output policy is on December 5 in Abu Dhabi.
Prices have surged 40 percent since mid-August. OPEC officials have said speculative investment, international political tensions and a weak dollar are to blame.
This is premature but we will discuss the issue when we meet, Naimi told Reuters in Kuwait.
Analysts said they expected oil prices to be highly volatile this week, influenced by the expiry of NYMEX December options contracts on Tuesday.
Some 42,000 options contracts to buy oil at $100 were still open on Friday. Experts said speculators might try to push oil into triple digits ahead of the expiry, but prices could tumble once the options expire.
(Reporting by Fayen Wong and Janet McBride; editing by James Jukwey)