Brent oil prices fell back under $100 per barrel on Tuesday after Norway acted to end an oil workers' strike, while sentiment was also hit by news of weak Chinese crude imports.
Brent North Sea crude for delivery in August shed $1.51 to $98.81 per barrel in late afternoon deals in London.
New York's main contract, West Texas Intermediate (WTI) crude for August, shed $1.02 to stand at $84.97 a barrel.
“Prices gave back Monday's gains to slide lower as Norway's government intervened in a labour strike and ordered a last-minute settlement to prevent a full closure of its oil industry,” said Sucden analyst Myrto Sokou.
“It should be noted that the oil strikes in Norway that started two weeks ago, had already cut oil production by 13 percent from the world's No. 8 producer.
“Following these tentative conditions in Norway, Brent oil retreated on Tuesday and tested the $99 per barrel area, while WTI crude oil consolidated around $85 per barrel.”
Norwegian oil fields ramped up output on Tuesday after the government intervened to end a 16-day strike that would have halted production by western Europe's largest crude exporter.
“The strike is over,” labour ministry spokesman Jan Richard Kjelstrup told AFP after the last-minute deal that sent North Sea crude prices plunging below the key $100 threshold in Asian trading.
Norway's state-owned giant Statoil, the group most hit by the strike, said it was ramping up to resume production at sites affected by the movement and expected normal output levels by the end of the week.
The government's move to settle the dispute angered unions, who said their negotiation options had been narrowed.
“We are very disappointed,” said Martin Sheen, who represents the Industri Energi union. “We think it was not necessary at all.”
The dispute over pensions between unions and employers - in what is the world's eighth-biggest oil exporter and second-biggest exporter of gas - will now go to binding arbitration.
The lockout would have prevented more than 6,500 people from going to work on the Norwegian continental shelf and cut off production of about two million barrels of oil equivalent a day.
Market sentiment was also dented on Tuesday by fresh fears about the oil demand outlook for China, which is the world's biggest energy consuming nation.
“Disappointing Chinese import figures are adding to the burden on prices,” added Commerzbank analyst Carsten Fritsch.
“China imported considerably less crude oil in June due to the fact that refineries sharply cut their capacity utilization last month.
“According to the Chinese customs authorities, crude imports plunged 12 percent month-on-month to 5.29 million barrels per day, the country's lowest import level this year.
He added: “The reduced oil demand from China could result in a further increase in the already considerable oversupply on the oil market, thus precluding any further recovery of oil prices.” - Sapa-AFP