New York's main contract, light sweet crude for September delivery, rose 45 cents to $US123.71 a a barrel.
The contract dropped $US2.23 to close at $US123.26 on the New York Mercantile Exchange on Friday.
The benchmark New York contract has lost more than $US23 since striking an all-time high above $US147 on July 11.
"A large part of that is just a shift in market sentiment focussed on the soft trend in US consumption, and the belief that Saudi Arabia has increased production,'' said David Moore of the Commonwealth Bank of Australia.
Prices have eased recently while concerns mount about demand for oil in the face of prolonged weakness in the US economy, the world's biggest energy consumer, analysts said.
Saudi Arabia is the largest producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel, which produces about 40 per cent of the world's oil.
Oil prices broke through the $US100 level at the start of the year and then rose to a series of record highs on concerns about supply, stoked in part by tensions between the West and Iran over that country's nuclear programme.
Unrest in key African producer Nigeria was another factor, analysts said.
The price of oil could drop to between $US70 and $US80 a barrel if the US dollar strengthens and concerns over Iran are reduced, OPEC chief Chakib Khelil said Saturday.
Wall St will struggle to shake off bears
Oil holds stock market hostage
