Oil prices fell Monday amid a strengthening dollar, hovering at around 68 dollars a barrel after spiking to seven-month highs above 70 dollars before the weekend.
New York's main futures contract, light sweet crude for delivery in July, dipped 35 cents from its closing price on Friday to 68.09 dollars a barrel.
On Friday the contract had at one point touched 70.32 dollars -- the highest level since November 4.
London Brent North Sea crude for July delivery dropped 46 cents to 67.88 dollars.
"The rise of the euro and sterling (pound) versus the dollar has stumbled, and one of the more tenuous reasons for holding length in oil, or any other dollar based commodity for that matter, is in retreat," said John Kilduff of MF Global.
A stronger US currency makes dollar-priced crude more expensive for buyers holding weaker currencies, in turn denting demand and pushing down prices. When the dollar weakens the reverse tends to occur.
The dollar has been climbing against key currencies, especially the euro, since Friday as traders digested a mostly positive US jobs report and a credit downgrade for Ireland, while British political turmoil threw the spotlight on the pound.
Some analysts said oil prices might have climbed too rapidly against the uncertainly over a global recovery from the worst economic crisis in decades.
"I think there are still demand issues with this high unemployment rate continuing over the next months," said Andy Lipow of Lipow Oil Associates.
A US labor report on Friday said the unemployment rate surged to 9.4 percent in May, while the number of job losses slowed to a better-than-expected 345,000.
The report, seen as one of the best indicators of economic momentum in the United States, the world's biggest energy consumer, suggested that the pace of massive job cuts is easing, a positive sign for the recession-battered economy.
Despite the bearish oil market Monday, "pricing continues to be very strong and the trade momentum is really resisting downward pressure from the (supply and demand) fundamentals," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.
"Crude prices are due for a correction but trade momentum will continue to keep pricing at a strong level," he said.
Crude oil will remain priced at around 65 to 70 dollars a barrel until the end of 2009 before rising, Algeria's Energy Minister Chakib Khelil said on Saturday.
"The market will stay within a band of 65 to 70 dollars until the end of 2009 because (US) fuel consumption will rise in summer, but it is difficult to predict the market," Khelil said in Algiers, quoted by the local APS agency.
"The price of oil will very probably pass the 70-dollars-a-barrel limit from 2010, as the world economy recovers," he added.
After plunging from record highs above 147 dollars last July on supply concerns, oil prices touched multi-year lows in December, at one point nearing 32 dollars a barrel, as the economic slowdown crushed demand for energy.