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International benchmark Brent crude climbed 10 percent last week
but was still heading for its fourth straight monthly decline
and has risen in only two of the past 14 months.
At 1052 GMT, Brent <LCOc1> was down $1.14 at $48.91 a barrel and
U.S. crude <CLc1>, which had rallied 12 percent last week,
dropped 81 cents to $44.41.
"Volatility was high last week, so now we're seeing some
retracement - $50 is proving to be a resistance level," said
Olivier Jakob, analyst at Petromatrix, referring to Brent. "It
is still a market which is very well supplied."
Volume is expected to be lower than normal on Monday because of
a British public holiday.
Chinese equities fell sharply on Monday before recovering much
of their losses ahead of a survey expected to point to further
economic weakness.
China will release its official reading on August factory
conditions on Tuesday, and economists polled by Reuters believe
activity likely shrank at its fastest pace in three years.
Excess supply is weighing on oil. The Organization of the
Petroleum Exporting Countries, which used to adjust its own
supply to keep crude above $100, decided in 2014 to let prices
fall in order to retain market share.
OPEC's forecasts point to an oversupply of more than 2 million
barrels per day (bpd) on the market because of higher output
from members including Saudi Arabia and Iraq, and resilient
supply from countries outside the group.
Output from OPEC could rise even higher in 2016 if and when
sanctions on Iran are lifted.
A possible increase in U.S. interest rates is expected to
support the dollar, making dollar-priced commodities including
oil more expensive for users of other currencies.
Investors are looking ahead to U.S. business surveys, factory
orders, trade data and Friday's nonfarm payrolls this week after
comments by a top Federal Reserve official suggested a September
rate rise was more likely than some investors expected.
"We believe that bearishness is still in play," Phillip Futures
said in a report.
(Additional reporting by Keith Wallis; Editing by Dale Hudson
and William Hardy)
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