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Apart from retail sales that beat forecasts due to a holiday
boost, the flurry of Chinese data on Monday was largely
downbeat. The data followed a survey on Friday showing U.S.
consumer sentiment fell to a seven-month low in June.
Global benchmark Brent crude futures were down 3 cents to $82.59
a barrel at 1038 GMT. U.S. West Texas Intermediate crude futures
were down 13 cents to $78.32.
Last week, both benchmarks posted their first weekly gain in
four weeks on elevated confidence that oil inventories are set
to plunge as the summer season gets under way in the northern
hemisphere.
"The move higher was not unreservedly convincing," said Tamas
Varga of oil broker PVM of last week's gains. "Further weakness
is observed this morning due to sluggish Chinese factory
activity."
Reports from OPEC and the International Energy Agency last week,
although differing on the strength of oil demand growth this
year, had supported confidence that inventories would be drawn
down in the second half.
Still, BofA analysts said in a report that while the market
consensus is for higher oil prices in the third quarter, there
is a risk to prices if weak supply and demand balances persist.
"It is not yet clear whether balances will firm enough in the
third quarter to tip the market from a large apparent surplus
into a deficit that can lift prices," BofA analysts including
Francisco Blanch wrote.
On the geopolitical front, concerns of a wider Middle East war
lingered after the Israeli military said on Sunday that
intensified cross-border fire from Lebanon's Hezbollah movement
into Israel could trigger serious escalation.
(Additional reporting by Mohi Narayan in New Delhi and Colleen
Howe in Beijing; editing by Jason Neely)
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