Brent crude oil fell below $115 a barrel Monday as investors weighed a slightly firmer US dollar and the prospect of increased demand from the start of the US summer driving season.
Public holidays in the US and the UK yesterday were expected to limit trading volume. The US driving season, when gasoline demand usually rises, traditionally starts after Memorial Day holiday.
Brent crude slipped 39 cents to $114.64 a barrel by 1100 GMT, having held above the first technical support level of $114. US crude dropped 45 cents to $100.14.
"Trading volume is very thin with the UK and US markets not in. The only factor that I can see is a slightly firmer US dollar, which may put pressure on prices today," said Carsten Fritsch, analyst at Commerzbank.
The euro slipped Monday, running into key chart resistance as uncertainty over how Greece's debt crisis will be tackled kept investors on edge, while the dollar stabilised following a slide late last week.
A stronger dollar can reduce investor demand for dollar-denominated commodities such as oil.
Oil traders remained focused on gasoline. Gasoline futures soared on Friday in anticipation of higher demand this summer, but gains were limited as a plunge in US home sales added to economic worries.
Driving season starts
"There are expectations of prices picking up purely because of the drive time in the US," said Jonathan Barratt of Commodity Broking Services managing director in Sydney. "We feel that might actually support crude prices."
Even so, a US government report last week showed gasoline demand over the previous four weeks down 2 per cent on the year.
Brent crude has risen about 20 per cent so far this year, boosted by fighting in Libya that has halted its oil exports and unrest in the Middle East. High energy costs have sparked global concern as they are a drag on economic growth.
While the conflict in Libya has almost shut down oil output in what used to be Africa's third-largest producer, supply from all 12 members of Opec is expected to rise in May, according to a Reuters survey on Friday.