Pablo Gorondi, Associated Press
Oil prices fell below $98 a barrel Monday as the dollar strengthened, making crude more expensive for traders with other currencies, and sentiment was shaken by worries about Europe's debt crisis.
By early afternoon in Europe, benchmark crude for July delivery was down $2.47 to $97.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.17 to settle at $100.10 on Friday.
In London, Brent crude for July delivery was down $2.78 to $109.61 a barrel on the ICE Futures exchange.
The euro was down to $1.4018 from $1.4201 in late trading in New York on Friday -- briefly falling below $1.40 -- on concerns about European debt levels.
Speculation that Greece will have to restructure its debt payments started to hurt the euro on Friday.
"Since then we have the downgrade of Italy and the protests in Spain that are starting to get more media coverage," said Olivier Jakob of Petromatrix in Switzerland. "Without new fundamental developments it is likely to be harder to find strong fresh buying into crude oil if the euro weakens further."
Oil has dropped from a 30-month high near $115 a barrel on May 2 amid gains in the dollar and signs that U.S. gasoline demand is waning.
"With a resurgent dollar, weak macro-economic data, and high prices at the pump ... we don't believe the sell-off is over," energy consultant The Schork Group said in a report.
Monday's falls in Asian and European equity markets, which were down at least 1.5 percent in most cases, helped to weigh on commodity prices.
Traders were also closely watching an Icelandic volcano that erupted over the weekend and shut down the country's main airport Sunday.
In April 2010, an eruption from another volcano in Iceland prompted aviation officials to close Europe's air space for five days out of fear that the ash could harm jet engines. Thousands of flights were grounded, undermining jet fuel demand.
In other Nymex trading in June contracts, heating oil fell 6.32 cents to $2.8551 a gallon and gasoline dropped 4.13 cents to $2.8945 a gallon. Natural gas futures rose 0.5 cent to $4.235 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.