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Brent crude futures were down 78 cents, or 0.9%, at $82.69 a
barrel by 1030 GMT.
The March contract for U.S. West Texas Intermediate (WTI) crude,
which expires on Tuesday, was down 33 cents, or 0.4%, at $78.86
in tepid trade. The WTI April contract was down 72 cents, or
0.9%, at $77.74.
Front-month Brent and WTI futures last week gained about 1.5%
and 3% respectively, reflecting increasing risk of Middle East
conflict widening.
Capping those gains was slowing demand forecasts from the
International Energy Agency and a bigger than expected increase
to U.S. producer prices in January, amplifying inflation
concerns.
"WTI and Brent eased on Monday morning as investors re-adjust to
demand-side fears after a significant jump in U.S. producer
price index numbers," Phillip Nova analyst Priyanka Sachdeva
said in a note.
Crude futures had surrendered nearly all of Friday’s modest
gains in early Monday trading amid some profit-taking selling,
added Vanda Insights' Vandana Hari.
Demand jitters were magnified on Friday when U.S. Federal
Reserve policymakers signalled the need for "patience" over
expectations of cuts to interest rates.
Markets are also awaiting indications of the direction of demand
from China after it returns from a week-long Lunar New Year
holiday while Presidents' Day in the United States is set to
keep trade relatively muted.
The conflict in the Middle East continued over the weekend as
Israeli raids put the Gaza Strip's second-largest hospital out
of service.
On Saturday Yemen's Iran-aligned Houthi fighters claimed
responsibility for an attack on an India-bound oil tanker.
Another cargo ship was deemed to be at risk of sinking in the
Gulf of Aden on Monday after a Houthi attack.
The Organization of the Petroleum Exporting Countries (OPEC)
would be able to cover "most levels of disruption", ANZ Research
analysts said in a note, citing spare capacity at an eight-year
high of 6.4 million barrels of oil per day.
(Reporting by Natalie Grover in London, Katya Golubkova in Tokyo
and Emily Chow in SingaporeEditing by David Goodman)
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