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Brent crude fell 42 cents, or 0.53%, to to $78.89 a barrel by
1037 GMT while U.S. West Texas Intermediate (WTI) crude lost 46
cents, or 0.61% to $75.20.
Both benchmarks fell by more than $1 in the previous session.
Price pressure followed official data on Sunday showing
manufacturing activity in China, the world's top crude importer,
fell unexpectedly in April. This marks the first contraction in
the manufacturing purchasing managers' index since December.
"Most sub-indicators show that this might not be a short-term
aberration," said Iris Pang, Greater China chief economist at
ING, pointing to a weakening export market, lower imports in
March and falling wages.
A cloudly economic outlook in other parts of the world also
weighed on prices, analysts said.
"The unpredictable action of central banks in their mission to
tame elevated consumer and producer prices, the rhetoric and
action of consuming and producing nations have all cast a rather
long shadow of doubt on prospects going forward," oil broker
PVM's Tamas Varga said.
Investors will look for market direction from expected interest
rate hikes by inflation-fighting central banks, which could slow
economic growth and dent energy demand.
The U.S. Federal reserve is expected to increase interest rates
by another 25 basis points on Wednesday.
The ECB is also expected to raise rates at its regular policy
meeting on Thursday.
Euro zone inflation has slowed sharply from double-digit
readings late last year but remains high, making another rate
hike a necessity and leaving only its size up for debate, with
ECB policymakers split between a move of 25 or 50 basis points.
A poll on Monday showed that U.S. crude oil stockpiles,
meanwhile, are expected to have fallen for a third consecutive
week, providing some oil price support. [EIA/S]
The poll was conducted ahead of reports from the American
Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) on Tuesday.
(Reporting by Rowena Edwards in LondonAdditional reporting by
Emily Chow in SingaporeEditing by David Goodman)
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