PERTH - OIL fell below US$67 (S$99) a barrel on Monday, handing back some of the previous session's near 3 per cent gains, as traders shifted their focus back to slowing global energy demand amid the financial crisis.

Analysts said traders would now be looking for signs that Opec kingpin Saudi Arabia was cutting back its crude production in line with the cartel's agreement last month to reduce output by 1.5 million barrels per day (bpd).

'Demand concerns haven't gone away so that's a factor that is weighing on the oil price this morning,' said Mr David Moore, a commodities strategist at the Commonwealth Bank of Australia.

'Also, the contract ended higher on Friday because of a late spike on pre-weekend covering, so we're now seeing an unwinding of the short-covering positions.'

US oil settled up US$1.85, or 2.8 per cent, at US$67.81 a barrel on Friday, but ended the month down more than 32 per cent, the steepest monthly decline ever as global demand slows.

In three months, oil has wiped out gains that took more than a year to build, down more than half since they struck a record US$147.27 a barrel in July as a raft of poor economic data added pressure from weak demand reports in the US and other key consumer nations.

Opec members have no choice but to implement agreed output cuts and inform customers of the reductions if they want a stable oil price between US$70-US$90 a barrel, Opec President Chakib Khelil said on Sunday.

Mr Khelil said Saudi Arabia was the key to the success of the reductions, and if the world's biggest oil exporter took its time over the operation the oil price could be affected.

Other Opec members have begun to notify customers that they would reduce their crude oil sales in line with an Opec decision to cut output.

Iran's oil minister said on Saturday it had informed customer France's Total of an oil sales cut, while Kuwait has notified term customers in Asia it would reduce their crude oil supplies by 5 per cent from November.

Earlier last week, Nigeria and the United Arab Emirates told customers they would receive less oil, but top exporter Saudi Arabia has yet to inform customers of any fresh curbs.

Oil's sharp downturn has spurred some Opec members to call for additional supply reductions to arrest a continued slide in oil prices.

Iran's Oil Minister Gholamhossein Nozari said on Saturday that Opec will cut output further, if needed, to achieve stability in the oil market , adding to comments by Venezuelan oil minister last week that Opec should cut oil output by another 1 million bpd by December and should set a minimum price target of US$70 or US$80 a barrel.

Crude oil speculators on the New York Mercantile Exchange shifted to net short positions in the week Oct 28, the US Commodity Futures Trading Commissions reported on Friday. -- REUTERS