Brent crude for delivery in January slumped to a day's low of dollars 13.97 in hectic trading, but rallied to close at dollars 14.23, down 25 cents. The fall also knocked oil company shares amid reports that Kuwait had called for an emergency meeting of Opec, the oil exporters' cartel, to stem the slide.
Traders said the fall in crude prices reflected worries about an oil glut following Iraq's decision last Friday to accept UN monitoring of its weapons programme.
Earlier this month an Opec oil ministers' meeting broke up in disarray after members failed to agree on production cuts. Iraq's re-entry would force all Opec producers to cut output to avoid a collapse in prices.
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