By Robert Gibbons
NEW YORK (Reuters) - Oil prices fell in low-volume trading on Monday as the dollar rose against the yen after Japan intervened in the market to stem the rise of its
currency.
Both Brent and U.S. crude futures remained on pace to post monthly gains.
Brokers and analysts attributed at least some of the weak volume and choppy price movements to MF Global Holdings Ltd, the futures broker run by former Goldman Sachs chief Jon Corzine, filing for Chapter 11 bankruptcy.
"It's not going to be as easy moving accounts over to a new firm. There are going to be a lot of people in line and so I would think that it's going to be a very volatile, low volume week," said Carl Larry, of Blue Ocean Brokerage.
The U.S. dollar climbed to a three-month high against the yen after Japan's latest intervention, its third this year and less than three months after the previous, coming only days before a Group of 20 leaders' summit in France.
The euro weakened against the greenback and the dollar index strengthened against a basket of currencies. A stronger dollar can pressure dollar-denominated oil by making it more expensive for consumers using other currencies.
"This morning, it is the Japanese intervention in the foreign exchange market. On the macro front, it is a big week this week," Olivier Jakob with Petromatrix said.
ICE Brent December crude fell $1.26 to $108.65 a barrel by 1:25 p.m. (1725 GMT), having moved below the 50-day moving average at $109.67 and as low as $108.20. Brent remained on track to post a 6 percent monthly gain, biggest percentage rise since April.
U.S. December crude fell $1.01 to $92.31 a barrel, after dropping as low as $91.36, still on track to post a 16 percent monthly gain, biggest since May 2009.
Brent's premium to its U.S. counterpart seesawed, but remained above $16 a barrel.
Crude trading volumes were low, with U.S. crude 70 percent below its 30-day average at midday in New York and Brent 49 percent below its 30-day average.
Low trading volumes also were believed to be a result of a snowstorm that hit the U.S. Northeast over the weekend, disrupting electric power and transportation lines.
Front-month November U.S. gasoline and heating oil futures also fell on the day the contracts expire.
U.S. stocks fell more than 1 percent as enthusiasm over the agreement to tackle the euro-zone debt crisis waned and the spike in the dollar hurt commodity-related shares.
Lack of detail on the euro zone's rescue plan had bank shares lead European shares lower, though the broader market posted a monthly gain, the first since April.
Investor focus this week includes a U.S. Federal Reserve meeting ending Wednesday, a Thursday European Central Bank press conference, and a G20 meeting mid-week, all coming after the latest effort to deal with the euro-zone debt crisis.
Friday will bring the release of key U.S. October nonfarm payroll employment numbers.
OPEC OCTOBER OUTPUT LOWER
OPEC oil output fell for a second month in October as reduced supplies from Iraq, Nigeria, Saudi Arabia and Angola offset another rise in supply from Libya, according to a Reuters survey.
The International Energy Agency does not want OPEC to move to cut output at the producer group's next meeting in December because the IEA expects demand for OPEC oil will grow by half a million barrels per day in 2012 than it October output, a top IEA official said.
Abdullah al-Badri, OPEC's secretary-general, said on Monday that the crude oil market was balanced and there was no over supply, the Iranian Oil Ministry's website SHANA reported.
(Additional reporting by Janet McGurty and Gene Ramos in New York, Ikuko Kurahone in London and Rebekah Kebede in Perth; Editing by Marguerita Choy and Sofina Mirza-Reid)
