Crude oil futures fell Monday in Asia as traders pocketed earlier gains, reacting to Friday's weak U.S. jobs data and warmer temperatures in the country's Northeast, the leading demand center for winter heating fuels.
However, remarks over the weekend by top officials from the Organization of Petroleum Exporting Countries, a group that pumps nearly 40% of the world's crude, appeared to signal members' reluctance to supply more in the near term, a development that's shoring up sentiment.
"Until something major changes, this is and is likely to remain a bullish market," said Peter Beutel, president at energy trading advisory firm Cameron Hanover.
"We should expect to see crude oil trading over $100 regularly."
On the New York Mercantile Exchange, light sweet crude for February delivery traded at $97.41 a barrel at 0645 GMT, down 50 cents in the Globex electronic session.
Nymex heating oil futures for February slipped 75 points to 267.60 cents a gallon, while February reformulated gasoline blendstock stood at 250.45 cents, or 65 points lower.
Nymex crude fell 1.3% at its settlement Friday - failing to touch the psychologically important $100 mark for the first time in three sessions - after the U.S. Department of Labor reported the country's non-farm payrolls rising just 18,000 in December.
It was the U.S. job market's worst performance since a decline in August 2003 and came alongside an increase in the unemployment rate to 5.0%, the highest level since November 2005.
Amid warmer-than-usual temperatures since the weekend in the U.S. Northeast, market participants are opting to take profit.
"Traders are now locking in gains made over the year-end...(although) prices may test $100 if there's any unexpected fall in temperatures," said Yusuke Seta, a broker at Fimat Japan.
OPEC chatter also weighed in, with about four weeks before the 13-member group gathers in Vienna to discuss policy.
On Saturday, Algeria's Energy Minister Chakib Khelil, OPEC's president this year, said oil at $100 is "not necessarily very high," given strong demand for oil and higher production costs.
He also predicted the price rally may "go on until the end of the first quarter of 2008 before stabilizing during the second quarter."
Khelil's remarks were followed Sunday by a report from Al Arabiya television, which quoted Saudi Arabia's oil minister Ali Naimi as saying that "the market decides the price of oil."
The comments suggested OPEC is unlikely to take any action before its Feb. 1 meeting, despite record-high prices.
"OPEC continues to tell reporters how everything is moving on the back of speculation - and the ministers have been singing this same song for nearly six years, since prices were $30," Beutel said Monday in his daily note to clients.
"They say that they don't want prices this high, but they are not willing to do anything to push prices back down."
Still, some market watchers are cautious about the price upside.
Even though a weak U.S. dollar is likely to continue keeping oil prices high, fundamentals may be undermined by growing signs of economic strain.
"While we still look for fresh highs in crude oil...we are maintaining an opinion that prices will decline sharply later this month, possibly by as much as 15%-20%," said Jim Ritterbusch at Ritterbusch and Associates.
At 0645 GMT, oil prices on London's ICE Futures exchange also moved lower.
Brent crude for February fell 32 cents to $96.47 a barrel, while January gasoil changed hands at $841.25 a metric ton, down $5.25 from Friday's settlement.