Oil prices eased slightly yesterday as speculators took profits from a four day rally.
But the potential for supply disruptions in a market already fearing a winter fuel crunch kept prices near record highs of almost $60 a barrel.
US light sweet crude for July dropped 57 cents to $58.80 a barrel.
The expiring contract gained 90 cents in New York on Monday, having hit a record peak of $59.52 a barrel.
August crude which becomes the top month on Wednesday, dropped 63 cents to $59.35 a barrel.
London Brent crude weakened 50 cents to $57.82 a barrel.
"We may see a lot of funds selling out before it hits $60 because speculators want to tighten up their profits," said Gerard Burg, minerals and energy economist from National Australia Bank.
"But there is a considerable opportunity to exceed $60 if there are supply disruptions," he added.
Oil prices have surged more than $12, or 26 per cent, over the past month as speculators bet that refiners worldwide will struggle to keep up with fuel demand this winter.
Concerns over the stability of supply from key producer nations has also resurfaced recently, adding to the market's anxiety and helping prices to a four-day, $4-plus rally.
In Norway, the world's number three oil exporter behind Saudi Arabia and Russia, mediators were working to avert a potential strike that could halt 920,000 barrels per day of oil output by top oil and gas firm Statoil.
A deadline for the deal was set for midnight last night. The dispute is over interim adjustments to a two-year wage settlement for the offshore industry.
Islamic militant threats against western diplomatic offices in Lagos on Friday spooked traders, although it did not have any impact on supplies from the world's eighth largest exporter and key supplier to the US.
