Brent crude slipped below $69 a barrel on Tuesday, primarily due to a rally in the United States dollar in recent sessions, and expectations of rising production levels in the US.
That said, the recovery in oil prices over the past year has allowed the USA shale producers to reinstate their shale oil production, which had become non-profitable due to extremely low oil prices.
Futures in NY dipped as much as 1.4 percent on Monday as the rising value of the USA currency crimped demand for dollar-denominated assets.
Oil prices slid Monday as a rising USA oil output weighed on the market, reported. The U.S. benchmark crude fell 58 cents to close at $65.56 on Monday, after jumping 4.4 percent last week.
West Texas Intermediate, the USA benchmark, was down 1 percent to $65.45 per barrel.
Prices are still heading for a fifth consecutive monthly gain.
JP Morgan said the increase was largely due to OPEC withholding supplies, but added it expected prices to fall towards the end of the year as markets become "flush with oil from (U.S.) shale and other unconventional oils".
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Iraq's southern export capacity is 4.6 million barrels a day and the country is "determined"' to reach 5 million a day by year-end, Oil Minister Jabbar Al-Luaibi said at a conference in London.
"If the bond selloff continues and the USA dollar rallies, oil is vulnerable after such a strong rally", said Ric Spooner, a Sydney-based analyst at CMC Markets.
Traders said oil has also been supported by a weakening dollar, which has lost over 3 percent in value against a basket of leading currencies since the start of this year and is down by nearly 13 percent since January 2017.
The rally in oil prices had recently been fuelled by the USA dollar's six straight weekly slides.
Oil consumption is surging as a result of growth in major economies, while OPEC and its allies have made repeated commitments to cutting their crude output by 1.8 million barrels per day (MMBPD). US energy companies added 12 oil rigs drilling for new production last week, taking the total to 759, General Electric (GE.N) Baker Hughes energy services firm said on Friday. But the currency has rebounded 0.3 percent since Friday to 89.31, which has weighed on crude prices.
"Expectations for U.S. crude inventories to rise for the first time in 11 weeks may also be keeping oil under pressure, according to a preliminary poll by Reuters on Monday".