Oil prices sank Monday, giving up about half of their gains from the previous two sessions, with little changed in the oversupply situation to sustain a rally.

In New York trade the benchmark West Texas Intermediate contract for March delivery slid $1.85 to $30.34 a barrel.

In London, Brent North Sea crude for delivery in March finished at $30.50 a barrel, down $1.68 from Friday's settlement.

Analysts explained the 15 percent jump in crude prices on Thursday and Friday as a combination of speculative moves and expectations that the looming blizzard hitting the US East Coast would drive up demand for heating oil sharply.

Gene McGillian of Tradition Energy said last week's price surge was "mostly short covering after dropping to 12-year lows."

But downward pressure returned on Monday, he said, in part on more worries about the slowdown in Chinese demand and reports that Saudi Arabia plans to push forward with energy development work without cutting back production.

"The question is, are we going to continue lower and retest our lows, and right now, it doesn't seem like there's anything to stop this."

Meanwhile James Williams of WTRG Economics said that while the weather gave a short spurt to fuel oil prices in the United States, he does not see this being sustained, in part because post-blizzard temperatures are expected to be very mild.

"It (Other OTC: ITGL - news) wasn't so much colder and so, it did not have an impact on heating oil."

He said he expects crude to sink back to $30 a barrel or "even lower".

On Monday, the head of OPEC repeated that he wants oil producers outside the Organization of the Petroleum Exporting Countries to assist in reducing the global oversupply.

"It is vital the market addresses the issue of the stock overhang," Secretary General Abdullah el-Badri told a conference in London.

"It should be viewed as something OPEC and non-OPEC tackle together."