Oil eased yesterday as Opec's president said he saw no need to rein in output and oil major Total said it would restart its French refineries after unions ended a strike.
US light sweet crude for July delivery eased 36 cents to $48.29 a barrel. London Brent crude was down 31 cents at $47.72 a barrel.
A two-week slide has wiped seven per cent off prices and taken oil nearly $10 below its early April record high, as the dollar's rally to a seven-month peak versus the euro convinces some hedge funds to move money back into foreign exchange markets.
Speculative traders on the New York Mercantile Exchange (NYMEX) have switched to a net short crude oil position for the first time in four months, US data showed.
The president of the Organisation of the Petroleum Exporting Countries said last week that the cartel was content to allow prices to ease into the $40 to $45 range and saw no need to cut production when it next meets on June 15.
"There is no need to trim, we will continue at this level," Sheikh Ahmad al-Fahd al-Sabah, also Kuwait's oil minister, said.
Since early February, US crude oil inventories have climbed more than 13 per cent to their highest level in six years, pumped up by near-record Opec production meant to create a bigger cushion for an expected jump in winter demand.
Qatar's oil minister warned yesterday that global oil inventories were piling up too quickly and urged Opec producers to act with caution.
Abdullah al-Attiyah stopped short of saying the cartel would have to cut excess supply above its formal output ceiling, now running close to one million barrels per day (bpd).
"This is something we have to talk about at our next meeting," Abdullah Attiyah said. "I'm concerned that stocks are building too quickly. We have to be very careful."
The oil minister of Venezuela, typically a price hawk, said at the weekend Opec would have to consider cutting output.
Prices also eased after European oil major Total said at the weekend that its five refineries in France halted by a strike would be back in operation yesterday.
Over the course of last week, Total had been forced to shut down plants that refine more than 900,000 barrels per day of crude due to a strike over a public holiday, sparking worries of a squeeze on motor fuels ahead of the summer.
Total is the largest European exporter of gasoline to the United States, where demand spikes during the summer as drivers take to the roads for vacations. The driving season typically begins over the Memorial Day holiday, this weekend.