Oil prices fell Monday as traders took profits after the previous session saw prices rise nearly US$2 a barrel on expectation that a late winter cold snap in the U.S. Northeast, the world's largest heating oil market, would lead to a rise in fuel demand.
Light, sweet crude for March delivery dropped 15 cents to US$58.87 a barrel on the New York Mercantile Exchange mid-afternoon in Singapore.
Brent crude for March delivery on the ICE Futures exchange lost 31 cents to US$58.10 a barrel.
The Nymex contract on Friday rose US$1.72 to settle at US$59.02 a barrel on colder-than-normal U.S. weather and supply worries driven by a second round of OPEC production cuts.
Oil prices had earlier fallen as low as US$49.90 a barrel after an unseasonably warm January.
"The market is just looking at the current cold weather in the U.S. and taking long positions" based on it, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
A cold snap that rushed across the U.S. Northern Plains and Midwest late last week was now affecting the Northeast as well, with below-normal temperatures expected from the Dakotas into New England over the next few days, Accuweather.com reported Sunday.
"Along with the brutal cold will come strong winds, which will make the already frigid temperatures feel even colder," the forecaster said on its Web site.
Oil prices had also been supported Friday by concerns the two main Nigerian oil workers' unions would hold a strike this week in protest of rising violence in Africa's biggest petroleum producer. The planned Monday strike was called off pending a meeting with President Olusegun Obasanjo.
The 20,000-strong blue- and white-collar unions had threatened the work stoppage after an increase in the number of kidnappings and oil-industry attacks across the southern Niger Delta area, where most of crude in Africa's oil giant is pumped.
Also in Nigeria, officials said Sunday hostage takers released nine Chinese oil-worker captives, reports AP.
Expectations that the Organization of Petroleum Exporting Countries will tighten their spigots further are also likely to shore up crude oil prices. The Wall Street Journal reported last week that Saudi Arabia has advised its customers of its impending 158,000 barrel a day output cut effective Feb. 1. The reduction is part of a December agreement by OPEC to cut output by 500,000 barrels a day on top of an earlier production cut of 1.2 million barrels a day.
In other Nymex trading, heating oil prices dropped 0.44 cent to US$1.6796 a gallon (3.8 liters) while natural gas futures gained 22.4 cents to US$7.7 per 1,000 cubic feet.