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Brent crude futures dropped 45 cents, or 0.56%, to $79.23 per
barrel by 0646 GMT. U.S. West Texas Intermediate crude futures
slid 58 cents, or 0.76%, to $76.07 a barrel.
Both benchmarks fell nearly 2% last Friday as investors tempered
expectations of demand growth from China, but ended the week
largely unchanged from a week earlier after a batch of U.S. data
last week showed inflation was moderating and retail spending
was robust.
"Persistent concerns about slow demand in China led to a
sell-off," said Hiroyuki Kikukawa, president of NS Trading, a
unit of Nissan Securities, adding another factor was the
approaching end of the peak driving season in the United States.
"Still, tensions in the Middle East and the escalation of the
Russian-Ukraine war, which pose supply risks, are underpinning
the market," he said.
Customs data over the weekend showed that China's diesel and
gasoline exports fell sharply in July, reflecting lower crude
processing levels in the month because of weak profit margins.
On Thursday, data also showed China's economy lost momentum in
July, with new home prices falling at the fastest pace in nine
years, industrial output slowing and unemployment rising.
That has stoked worries among traders about a slump in demand
from China, where refineries sharply cut crude processing rates
last month on tepid fuel demand.
Meanwhile, U.S. Secretary of State Antony Blinken arrived in Tel
Aviv on Sunday on another Middle East tour to push for a
ceasefire in Gaza, but Hamas raised doubts about the mission by
accusing Israel of undermining his efforts.
The mediating countries - Qatar, the United States and Egypt -
have so far failed to narrow enough differences to reach an
agreement in months of on-off negotiations, and violence
continued unabated in Gaza on Sunday.
(Reporting by Yuka Obayashi and Colleen Howe; Editing by Stephen
Coates and Jacqueline Wong)
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