After climbing above $70 a barrel for the first time in three years earlier this week, Brent crude fell more than 1% on Friday after an international energy watchdog raised its US supply forecasts, while OPEC expressed concerns over a renewed flood of US oil.
The International Energy Agency said on Friday that it was revising higher its forecasts for US oil production growth.
Meanwhile, on Thursday OPEC appeared concerned that higher prices will prompt higher-cost producers in the US to raise their output.
IEA monthly report
The IEA was the latest energy body to lift its estimates for output in 2018 after it said: "This year promises to be a record-setting one for the US."
In its monthly report the organisation said production growth in the US was returning to the "heady days" of 2013-15, with total output on course to overtake Saudi Arabia and rival Russia.
OPEC monthly report
"Higher oil prices are bringing more supply to the market, particularly in North America," OPEC - whose general secretary is Mohammad Sanusi Barkindo (left) - said in its monthly report on Thursday, raising its forecast for non-OPEC supply growth by 16% to 1.15 million barrels per day.
The organisation said it expected growth in US crude oil supply to rise by 110,000 barrels per day to 820,000 b/d - mostly led by conventional production.
OPEC ministers and their allies, including Russia, meet at the weekend in Oman to discuss the output curbs that were extended in November to last the rest of this year.
Speculative positions on crude futures contracts suggested to some analysts that a break lower in oil prices was likely in the coming weeks.
With a record bullish position seen taken by hedge funds and other asset managers in the last week, some analysts feared the market looked stretched and vulnerable to a correction.
Managers increased net long positions - speculation on prices continuing to move higher - by 67 million barrels to a record 1.399 billion barrels in the week to 9 January.
"Barring any geopolitical upsets, the record 1 billion-barrel oil long held by funds at the beginning of 2018 could pose a potential challenge to the current bullish momentum," said Ole Hansen, head of commodity trading at ING.
"Given the impact on the price of oil of a few hundred thousand barrels per day in changed supply or demand, we see the risk – especially during the coming months – skewed to lower prices, with Brent crude oil at risk of returning to $60/b.”
Brent crude fell to a session low of $68.31 on Friday, having hit a three-year high of $70.37 earlier in the week. By 0800 in London Brent was down 0.92% at $68.67 a barrrel.
Nymex West Texas Intermediate fell 1.19% to $63.20 a barrel.