Oil fell almost $1 today as industrialised nations agreed to release 60 million barrels of emergency oil stocks to ease a US fuel supply crisis.
Brent crude futures on the International Petroleum Exchange deepened Friday's $1.66 losses to trade down 86 cents, or 1.3 per cent, at $65.20 a barrel - about even with levels before hurricane Katrina disrupted the US oil industry.
Activity was limited as the more active New York Mercantile Exchange was shut for the US Labour Day holiday.
US crude closed down $1.90 at $67.57 on Friday after news of a co-ordinated stockdraw drove prices further away from their record $70.85 a barrel high, touched last Tuesday.
The International Energy Agency (IEA) confirmed late on Friday that its 26 members would release two million barrels per day (bpd) of oil for 30 days to offset the impact of the storm, which knocked out a tenth of US refinery output and a quarter of its domestic crude production last week.
It is the first time since 1991 that the IEA has tapped its members' 1.5 billion barrels in government oil stocks, created in the 1970s after the Arab oil embargo.
The United States will auction off half the total in the form of crude oil from their Strategic Petroleum Reserve, while European and Asian countries may be able to supply more oil products such as petrol.
Japan, whose massive state oil reserves are also entirely crude oil, said it would supply 240,000 bpd of the total, with the release set to be mostly oil products from private-sector inventories.
The US oil industry is still struggling to recover from the Hurricane Katrina, which flooded refineries, cut power supplies to pipelines and knocked down rigs and platforms a week ago.
Only one of the eight refineries in Louisiana and Mississippi shut by the storm had restarted by Sunday evening, while two of the largest plants have suffered extensive flooding and could be down for months, the government has said.
Crude oil output from the Gulf of Mexico, home to a quarter of US domestic production, was running at 21 per cent of its normal rate, up 10 percentage points from Friday.