World oil prices have fallen further as traders booked more profits amid concerns that high energy costs could erode demand and hurt the global economy, analysts say.
Brent North Sea oil for delivery in April fell 66 cents to $US123.51 per barrel in late afternoon deals in London.
New York's main contract, light sweet crude for April, shed 29 cents to $108.27.
"Oil prices have fallen ... due to fears that high prices would lead to demand destruction," said Westhouse Securities analyst Andrew Matharu.
He added: "There are growing expectations that there will be no growth in global demand this year if high prices persist."
Prices also fell on profit-taking after the market hit a series of nine-month highs last week, stoked by intensifying concern over key crude-producing nation Iran.
"It seems that investors were prompted to some profit taking, following the strong rally in crude oil prices in the last three weeks," Sucden analyst Myrto Sokou said.
"So, it looks like a healthy correction lower in the oil market, while global equity markets are struggling to find some direction."
Prices also retreated this week after the Group of 20 major economies spurned Europe's appeal for extra funds to help fight the euro zone debt crisis until EU member states did more on their own first.
Disappointment over the weekend G20 meeting pushed the dollar higher, making dollar-priced oil more expensive for buyers using other currencies.
Traders are closely watching the situation in Europe, after data released by the European Central Bank (ECB) on Monday showed that bank lending to the private sector in the debt-strapped region remains fragile.
The ECB is preparing to flood euro zone banks with cheap money again this week in the second of two such operations to prevent a credit crunch in the region.
Meanwhile, tensions between Iran and the West over Tehran's controversial nuclear program were expected to provide further support to oil prices, according to analysts.
"We do not expect any more pronounced or prolonged price correction, as this is countered by the supply risks due to the Iran crisis," Commerzbank analyst Carsten Fritsch said.
Elsewhere, TransCanada Corp said on Monday it would go ahead with construction of part of its Keystone XL oil pipeline that does not require US presidential approval, a stretch from the state of Oklahoma to the US Gulf Coast.
The company also said it will resubmit its proposal for the entirety of the pipeline from Canada that was rejected last month by US President Barack Obama.
AFP