Oil dropped below $130 a barrel, after a stronger US dollar helped to pull prices down from peaks hit when rebels attacked Nigerian oil facilities.

US crude fell $2.27 to $129.92 a barrel by 1627 GMT. The New York Mercantile Exchange trading floor was closed on Monday for the US Memorial Day holiday.

London Brent crude lost $2.62 to trade at $129.75 a barrel.

Prices rose on Monday when Royal Dutch Shell said it was forced to cut production in Nigeria after rebels from the southern Niger Delta blew up an oil pipeline.

Around one-fifth of Nigeria’s oil output has been cut since 2006 following a series of attacks on pipeline and oil infrastructure.

Oil prices have climbed about 40 per cent this year to an all-time high of $135.09 last week, driven by an extended slide in the value of the dollar, which has driven buying of dollar-denominated commodities.

The dollar strengthened against the yen and the euro on after softer economic data in Europe.

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