U.S. oil prices fell nearly 3 percent on Monday as traders assessed the impact of wildfires on Canada's oil output and after another reported inventory build at the U.S. hub for crude futures.
The market rallied 2 percent earlier in the session as investors considered the daily loss of more than 1 million barrels per day in Canadian supply. Almost all of Canada's crude from oil sands is exported to the United States.
But with speculators already holding the largest number of wagers for a hike in U.S. crude's West Texas Intermediate futures since last summer and near-record high bullish bets on Brent, the scope for further gains was limited without clarity on the extent of damage to oil facilities or supply outages, analysts said.
Oil prices have risen more than 70 percent since hitting 12-year lows of around $27 or lower in the first quarter, supported by falling U.S. production, unexpected supply constraints in Libya and the Americas as well as a weaker dollar.