- Oil prices fell on Monday as markets opened following western air strikes in Syria over the weekend.
- Oil markets also came under pressure from a rise in U.S. oil drilling activity.
- Fund managers hold more Brent futures and options than at any time since records began in 2011, according to data from the InterContinental Exchange.
Oil prices fell on Monday after U.S. drilling activity rose and fears waned about escalating tensions in the Middle East following air strikes on Syria over the weekend.
The United States, France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7.
The oil price had risen nearly 10 percent in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks.
U.S. West Texas Intermediate crude futures ended Monday's session down $1.17, or 1.7 percent, at $66.22 a barrel. They hit a more than three-year closing high of $67.39 on Friday.
oil futures were down $1.13, or 1.6 at $71.45 a barrel by 2:26 p.m. ET (1826 GMT). The contract toughed a high last week of $73.09 going back to November, 2014.
"Some of the ease in Syria is the headline that is bringing it down," said Phil Streible, senior market strategist at RJO Futures in Chicago.
Because the attacks were more surgical than anticipated in more extreme scenarios, the market has shrugged off bullish factors, he said.
"It has got everything to possibly boost it: weak dollar, Syria, potential sanctions, White House uncertainty, China trade," he said.
Although Syria itself is not a significant oil producer, the wider Middle East is the world's most important crude exporter and tension in the region tends to put oil markets on edge.
"Investors continued to worry about the impact of a wider conflict in the Middle East," ANZ bank said.
Aside from a flurry of profit-taking after the air strikes, oil also came under some pressure from another rise in U.S. drilling activity.
U.S. energy companies added seven rigs in the week to April 13, bringing the total to 815, the highest since March 2015, and nearly 20 percent higher than a year ago, services firm Baker Hughes said on Friday.
Fund managers hold more Brent futures and options than at any time since records began in 2011, according to data from the InterContinental Exchange.
Investors have added to their bullish positions in Brent, which now equal nearly 640 million barrels of oil, in nine out of the last 10 months, in part thanks to the premium of the front-month futures contract over those for delivery at a later date, known as "backwardation."
Backwardation makes it profitable to retain a bullish position in oil futures.
The next event on investors' radar is a deadline looming in May by which U.S. President Donald Trump has threatened to withdraw the United States from a deal between Tehran and six world powers on Iran's nuclear restrictions, signed in 2015 before he took office, unless Congress and European allies help "fix" it with a follow-up pact.
Even the imposition of unilateral sanctions by the U.S. government could hamper exports of oil from Iran, one of the world's largest producers.
"Oil is still holding relatively well and the mid-May Iranian deadline is going to be a bit of a subject for the next four weeks," Petromatrix strategist Olivier Jakob said.
— CNBC's Tom DiChristopher contributed to this report.