Oil prices fell on Friday, dropping from highs last seen in 2015, as soaring U.S. production undermined a 10 percent rally from December lows that were driven by tightening supply and political tensions in OPEC member Iran.
Rising U.S. production and weaker refined products demand weighed on the market, traders said.
"The holiday demand surge that we get is in the rearview mirror," said John Kilduff at Again Capital. "That, coupled with the rebound in U.S. production is helping to undercut some of the recent price strength."
While product demand is up from a year earlier, robust stockpiles and a coldsnap in the U.S. could put a damper on demand.
Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, had pushed prices higher.
"The protests in Iran add more fuel to the already bullish oil market mood," said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer. On Friday there was no new major outbreak of violence in the country, relieving some of the tension from the market.