U.S. oil prices fell on Monday as production from the Organization of the Petroleum Exporting Countries neared all-time peaks and record speculative buying in global benchmark Brent sparked profit-taking on last month's outsized rally.
OPEC's crude production climbed in April to 32.64 million barrels per day, close to the highest in recent history, a Reuters survey showed.
Iraq's April exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC.
Traders also cited a bearish stockpile rise of 821,969 barrels at the Cushing, Oklahoma delivery point for U.S. West Texas Intermediate (WTI)crude futures during the week to April 29.
Brent crude rose 21.5 percent in April, its largest monthly gain in seven years. Speculator bets on higher Brent prices reached all-time peaks last week, while bullish bets on WTI futures and options rose to 10-month highs, feeding investor views prices may have risen too far, too fast.
"While such huge speculative length in the crude benchmarks isn't capable of independently reversing the strong up trend of recent months, it will certainly act to accentuate price declines," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Monday's volume in Brent was visibly lower with the market in London closed for the May Day holiday. The premium until Friday in Brent's front-month versus second-month, known as "backwardation," also ended, with a discount, or "contango," now in its place.
"We would not be surprised to see the rally pause for breath soon and feel that the risks currently lie more to the downside," London-based Capital Economics said in note.
"We are leaving our end-2016 forecasts (for both Brent and WTI) at $45 per barrel, slightly below today's levels."
A weaker dollar which makes it cheaper for countries using other currencies to import dollar-traded fuel, kept further oil price losses at bay.
The chief of the International Energy Agency (IEA) said oil prices may have bottomed out if no major global economic issues emerge.
"In a normal economic environment, we will see the price direction is rather upwards than downwards," IEA Executive Director Fatih Birol said on Sunday during a G7 meeting of energy ministers in Japan.
Non-OPEC output is set to mark its biggest decline in around 20 years, Birol said.
At the G7 meeting, U.S. Energy Secretary Ernest Moniz said U.S. production would likely fall by 600,000 bpd this year from 2015, when output peaked at around 9.6 million bpd.
Last week, Texas-based Ultra Petroleum Corp, a victim of low oil and gas prices, filed for Chapter 11 bankruptcy protection.
The IEA's Birol also said a drawdown in global stockpiles should start toward the end of the year, though some U.S. shale producers are using the price rally to hedge their production.