Oil prices fell further on Thursday as speculative funds bailed out of long positions on sentiment that the long winter rally had run out of momentum.
US light crude was down 85 cents at $32.77 a barrel. It hit a daily low of $32.41, around $4 below 10-month highs notched last week.
Brent crude in London dropped 64 cents to $29.13 a barrel in a fifth-straight downward session that has helped knock around 8 percent from the price of oil since mid-January.
"This is continued fund liquidation," said an IPE broker.
Funds had built up massive long positions in recent weeks, and a report last week by the US Commodity Futures Trading Commission showed they had only slightly trimmed their length by January 20, when net long positions sat at 51,516.
In the past few days, speculators have unwound some of those longs, taking cues from warmer US weather and a faltering of the rally staged Wednesday on the back on a drawdown in US stocks.
Strength in the dollar added to the downward move on Thursday.
"The market's sudden decline this week, especially yesterday and today, led as it was by heating oil, is acting a lot like an 'end of winter sale.' Perhaps traders realise that supplies are looking very sufficient to handle the worst that winter is likely to deal from here on out," said analyst Tom Mooney of Southeast Energy Inc.
The US government's statistical energy arm, the Energy Information Administration (EIA), agreed that heating fuel supplies were ample.
"Despite the frequent arctic air masses that swept over many portions of the Midwest and East Coast during January, heating fuel markets are poised to enter the last leg of the heating season with inventories that remain well positioned within their respective average ranges for this time of year," the agency said.
A long cold snap in the US Northeast moderated this week, helping oil prices cool from post-Iraq war highs, although forecasters now expect another chill to descend by the weekend.
High oil prices and low global inventories have also caused the exporters' cartel Opec to tone down earlier discussion of cutting production at a February 10 meeting in Algiers.
"There are no fundamentals that suggest the need to cut," Venezuelan Energy Minister Rafael Ramirez said on Wednesday, echoing earlier comments from his Iranian counterpart. "There is no chance of an increase in production."
Opec President and Indonesian Oil Minister Purnomo Yusgiantoro said there was no formal consensus among members as to the upcoming meeting.
Some members had been concerned about a price fall in the second quarter when demand declines after the northern winter.
The cartel is pumping an estimated 1.5 million barrels per day (bpd) over its formal 24.5 million bpd quota agreed after a surprise cut last September, according to tanker-tracking consultant PetroLogistics.
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