Oil eased on Friday on profit taking after a near 4 percent surge the previous session to a record above $140, as US lawmakers approved legislation aimed at curbing energy market speculation. US light crude for August delivery was down 43 cents at $139.21 a barrel in Globex electronic trading by 0503 GMT, after falling as much as $1.03 at the start of electronic trading.
London Brent crude fell 62 cents to $139.21.
"I think oil is down on a little bit of profit taking and also news from the US regarding increased regulation of markets," said Toby Hassall, an analyst from Commodities Warrants Australia. The legislation, which still needs Senate approval, directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.
Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.
Analysts said it would probably be weeks or months before the legislation could come into effect and dealers would instead focus on supply risks and dollar movements in the short term.
"It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment," said Hassall.
US oil hit a record of $140.39 on Thursday after Libya said it was studying possible options to cut output in response to potential US actions against Opec countries. "We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters by telephone, adding oil producers needed protection from what he viewed as US attempts to extend its jurisdiction beyond its territory.