Oil fell after surging to a record high above $90 a barrel earlier as tight fuel stocks ahead of winter and a softening US dollar spurred investor buying.
The jump in oil prices has been fuelled by unprecedented weakness in the dollar, which hit a record low against the euro on Friday, a factor that has supported all dollar-denominated commodities.
US crude dropped by 68 cents to $88.79 a barrel late this afternoon, having hit a record high of $90.07 earlier. London Brent crude lost 57 cents to $84.03.
Oil has averaged just over $67 a barrel this year and is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.
Besides the weak dollar, concern that supply may be stretched in winter, when fuel demand peaks, lent support to prices.
The price run-up has concerned OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on 1 November.
Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 percent below a year ago, while gasoline and distillate stocks are about 7 percent below last year.
Rising political tension between Turkey and Kurdish rebels in northern Iraq has also spurred gains, as traders worry about a disruption in flows of Iraq's northern oil exports.
