[LONDON] Oil dropped more than one per cent on Monday, with Brent slipping under US$62 a barrel, depressed by a stronger dollar and a rise in Libyan crude output.
The dollar hit an 11-year high against a basket of currencies after a rate cut in China dented the Chinese yuan and also hit emerging Asian currencies.
Brent crude hit a low of US$61.70 a barrel and was at US$61.90 by 1100 GMT, down 68 cents. Front-month Brent jumped 18 per cent in February, the largest monthly rise since May 2009.
US crude was down 55 cents to US$49.21 a barrel.
Disruption to oil supplies from members of the Organization of the Petroleum Exporting Countries (Opec) has helped support crude with lower output from Libya and Iraq in the first couple of months of this year.
But output from several Opec countries may be recovering.
Libya's oil production has now recovered to more than 400,000 barrels per day (bpd), officials said.
"Libyan production is up and Iraqi exports are on the rise," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates, saying crude markets were likely to fall further.
Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt, agreed, saying much of the recent strength in oil had been due to speculative buying.
"All in all the market is still over-supplied by a wide margin," Fritsch told Reuters Global Oil Forum. "We expect Brent to come under pressure again in Q2."
US oil markets are particularly weak with a US refinery strike denting demand for crude and domestic production still increasing, despite reports that the number of exploration rigs operating in North America is falling due to lower oil prices.
The number of oil rigs fell by 33 last week to 986, the smallest drop this year, a survey showed.
These diverging trends helped stretch the premium for Brent over US crude to its widest since January 2014 on Friday at US$13 a barrel.
Technical charts point to a further widening of the spread to US$16.98 in the next three months, Reuters market analyst Wang Tao said.