Oil slipped from a record high over $126 a barrel Monday as a dip in crude oil imports into No. 2 consumer China stirred concerns high prices were eating into demand.
U.S. crude traded down 24 cents to $125.72 a barrel, off an earlier record high of $126.40 a barrel. London Brent crude traded down $1.01 to $124.39 a barrel.
China's April crude oil imports decreased against year-ago levels, the first monthly year-on-year decline in 18 months, although analysts said the dip was a one-off adjustment as refiners ran down stocks after unusually high March purchases.
"This looks like a bit of a correction on a vastly overbought market," said Mike Zarembski, senior commodities analyst for optionsXpress.
"News that China's imports were down in April was a factor for some of the money to come off the table, but the market is still robust." Strength in distillates for power generation globally has supported crude in recent weeks, and signs demand could falter helped weaken the energy complex, Zarembski added.
Booming demand in emerging economies such as China and India have sent oil prices up six-fold since 2002, with the weak dollar also drawing a wave of speculators seeking a hedge against inflation over the past eight months.
"We sold off on the Chinese import data, which suggested prices at these levels are weighing on demand. But we've pared those losses," said Eric Wittenauer at AG Edwards.
"Time and again, this highly resilient market has sold off only to recover and hit new highs." Oil has jumped about 13 percent since slipping to $110.53 a barrel May 1, as investors seized on supply disruptions in the North Sea and Nigeria, as well as demand for distillate fuels such as diesel.
ICE gas oil futures fell more than $8 Monday on the expiry of the prompt contract, after rising to near last week's record high of $1,210 a tonne in early trading.
A recent Sanford C. Bernstein study said that investment flows in the Standard & Poor's GSCI index and Dow Jones-AIG Commodity Index had risen to $250 billion so far this year, up from $169 billion at the start of the year.
Oil's runaway gains prompted talk last week OPEC could consider boosting output before its next scheduled meeting in September should crude oil prices keep rising.
But oil officials from Ecuador, Qatar, the UAE and Iran said there were no plans for an early meeting as soaring prices were out of OPEC's control.