SINGAPORE: Oil fell in the first of four sessions on Monday, with Brent slipping towards $125, as weak Chinese exports heightened demand fears, countering support from supply disruption worries in the Middle East and Africa and a brightening US economic outlook.
China posted its largest trade deficit in at least a decade, fanning concerns that slowing exports from the world's second largest economy will hurt fuel demand.
Brent crude fell 61 cents to $125.37 a barrel by 0310 GMT and US crude was down 64 cents at $106.76. Brent's premium to US crude was at $18.61 after settling at $18.58 on Friday.
"It's hard for prices to rise sharply higher, although they are well supported because of the Iran situation and better economic data from the United States," said Ken Hasegawa, a Tokyo-based commodity sales manager at brokerage Newedge Japan.
"After the two big events last week, we can see some profit taking."
Brent rose 1.88 percent last week in its sixth weekly rise in seven, after Greece averted an immediate default while employment data improved in the United States, strengthening prospects of better fuel demand in the world's largest oil user.
EYES ON SUPPLY
Investors are still spooked by supply concerns over Iran's dispute with the West over its nuclear program, on top of lower output from Syria, South Sudan and Yemen.
Iranian President Mahmoud Ahmadinejad has launched a fresh tirade against the West, saying the Islamic Republic does not fear military action.
The chairman of the US Senate Armed Services Committee said on Friday an international naval blockade of Iranian oil exports should be considered before any resort to air strikes against the country's disputed nuclear program.
In Syria, UN-Arab League envoy Kofi Annan has ended talks with President Bashar al-Assad and left the country with little sign of progress on halting its growing political bloodshed.
OPEC lowered on Friday production by non-OPEC countries in its monthly oil report by 130,000 barrels per day (bpd) from the previous month to a rise of 600,000 bpd this year, due to revisions in forecasts from Syria, the former Sudan and Yemen.
OPEC pumped the most oil in more than three years in February to make up for some of these losses, yet oil prices have surged more than 8 percent this year, raising concerns that expensive oil could hurt global economic growth.
Kuwait's oil minister expressed similar worries on Sunday, saying that current world oil prices are not justified.
"Everyone worries about expensive gasoline in the United States which might hurt economic growth," Newedge's Hasegawa said, adding that prices were unsustainable and could correct in the next few months.
Gasoline prices could peak soon on relatively soft consumer demand and as output will rise after refineries return to operation from seasonal maintenance if crude does not jump soon, a survey of gasoline retailers in the continental United States showed.
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