Oil prices fell on Monday, extending the previous session's decline on profit taking from record highs, but clung to $88 on violence between Turkish soldiers and Kurdish guerrillas and a record-low dollar.
U.S. light crude for November delivery, which expires later on Monday, fell 60 cents to $88.00 a barrel in Globex electronic trading by 0641 GMT. U.S. oil settled 87 cents lower at $88.60 a barrel on Friday, after touching an all-time high of $90.07 earlier.
The December contract dropped 61 cents to $86.34, after falling to as low as $85.89. London Brent crude for December fell 38 cents to $83.41 a barrel.
Analysts said oil's decline came as a surprise as news over the weekend was mostly bullish.
"A possible explanation could be more profit taking or that investors are adopting a more cautious view about how tight the market will be in winter in the northern hemisphere," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
U.S. oil, which has rallied more than 10 percent since October 8, has averaged just over $67 a barrel this year and is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.
The weakening dollar and surging energy costs have increased worries over the health of the U.S. economy, already battered by the crisis in the subprime mortgage sector.
Despite oil's slide since Friday's all-time high, analysts said mounting tensions between Turkey and Kurdish rebels in northern Iraq would continue to offer underlying support and keep prices close to record territory.
(Reuters)