Benchmark oil prices eased on Monday, but stayed close to 10-month highs, after forecasters predicted a chill in the United States would loosen its grip.
March crude on the New York Mercantile Exchange was trading at $34.59 a barrel, down 35 cents, or one percent, on the day.
It hit $36.37 last week, the highest price since March. "Temperatures, especially in the US Northeast, are returning to normal levels," said Shun Maruyama, an oil analyst at UFJ Institute Ltd in Japan.
Temperatures in the US Northeast, the world's biggest heating oil market, will increase to between four and eight degrees Fahrenheit below normal by next on Monday, against current temperatures of eight to 15 degrees below normal, private weather forecaster Meteorlogix said on Monday.
The US natural gas market led on Monday's price decline.
The February natural gas contract on Nymex was down 6.5 percent at $5.665 per million British thermal units.
Nymex February heating oil futures were off 1.75 cents to $1.0075 a gallon.
However, oil brokers said the downside potential for crude prices would be limited since temperatures were set to remain below normal for the time of year, signalling strong heating oil demand.
"Although they revised the forecasts just a little, it's still cold and we'll see decent support at the psychological $34 level," said a broker in New York, who declined to be identified.
In addition, US crude stocks at 265 million barrels were near 28-year lows and below the 270-million-barrel level that the US National Petroleum Council has said serves a warning that refineries could face supply problems.
March Brent crude futures listed on the International Petroleum Exchange in London were down 31 cents at $30.65.
Adding further pressure on the market, Oil and Petrolium exporting countries (Opec) giant Saudi Arabia signalled late last week a softer stance on the need for high oil prices to counter the decline in the value of the dollar.
Saudi Oil Minister Ali al-Naimi told delegates at the World Economic Forum in Davos that the kingdom would continue to aim for a central $25 target for a reference basket of crudes.
"I think a price of $25 a barrel for the Opec basket is the right price," Naimi said.
Oil and Petrolium exporting countries price index was most recently estimated at $30.71 a barrel.
Naimi's comments came ahead of a meeting planned by Oil and Petrolium exporting countries in Algiers on February 10 where it will consider production policy. Late last year, Naimi had said higher oil prices were justified because of the slump in the dollar, the currency used in oil trading.
An Oil and Petrolium exporting countries delegate for Indonesia, which currently holds the rolling presidency of the oil cartel, said on Friday the group should keep official production of 24.5 million barrels per day unchanged.
"The best thing for Opec is to roll over the current official production ceiling, or leave the status quo," the delegate, who declined to be identified, said.
The delegate said some Opec members wanted to cut production to prepare for the second quarter of the year when world oil demand declines as temperatures in the Northern Hemisphere rise.
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