Oil prices ended in negative territory on Monday after dealers took profits from a nearly $2 surge that had been triggered by export disruptions in Iraq and the North Sea.

U.S. light crude (search) settled down 10 cents to $45.33 a barrel, erasing gains that brought futures to $47.30 in the midst of the open-call session, their highest level since Dec. 1. London Brent fell 26 cents to $42.92 a barrel.

"There was meltdown late as the market could not push any higher than what it already tested... prices broke down on technicals and profit-taking," said Steve Bellino, senior vice president for energy risk management at Fimat USA.

Prices had jumped as Iraqi oil officials said that sabotage ahead of the country's Jan. 30 elections had paralyzed oil operations in the north of the country, forcing a suspension in refining while export flows remained idle.

"The Iraqi election and possibility of oil facility sabotage, approaching refinery maintenance/turnaround and the possibility the upcoming OPEC (search) meeting will endorse further cuts rallied the market," said brokers Refco in a report.

Buying interest was also supported after news that Saudi Arabia had cut crude allocations to major oil companies with global refining systems in February compared to January.

Trade sources told Reuters on Monday that the cuts were smaller than those made in January from December, but declined to give precise numbers.

OPEC members said last week they had implemented the cartel's 1 million barrel per day supply cut from Jan. 1.

Dealers also remain concerned that a cold snap in the U.S. Northeast, the world's biggest regional consumer of heating oil, could strain heating oil inventories that are nine percent below year-ago levels.

After a relatively mild weather so far during the Northern Hemisphere winter, forecasters are expecting a chill to set in over the eastern heating markets from late January through February, bolstering demand.

Short-term forecasters also said mild U.S. weather this week could come to an abrupt halt by the weekend, as an arctic blast sinks down from Canada.

Some 345,000 bpd of North Sea output was shut as inclement weather delayed repair operations there, while 145,000 bpd of Gulf of Mexico production remained closed due to damage from last September's Hurricane Ivan (search).

Royal Dutch/Shell restored 42,000 bpd of Nigerian production last Friday after a month-long community dispute, with full flows expected later this week. A total 144,000 bpd had been shut in by the dispute as well as pipeline vandalism.

Despite the hitches, U.S. crude oil inventories are well above last year's levels, stoking fears among some OPEC members of a possible price slide when world demand eases after the northern winter.

Analysts polled by Reuters Monday said they expected that U.S. crude supplies slipped last week, but held onto most of the surplus, while distillates inventories grew.

Iran's Oil Minister Bijan Zanganeh said last week that the Organization of the Petroleum Exporting Countries (OPEC) might have to cut production quotas if U.S. oil prices fell below $40 a barrel, although he did not see that happening soon.

Saudi Arabia, OPEC's biggest producer, is thought unlikely to back cuts if prices are still in the $40s for fear that sustained high fuel costs could hurt global economic growth.