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Brent crude futures fell by $1.65, or 2.1%, to $75.87 a barrel
by 1004 GMT.
West Texas Intermediate crude futures, which did not settle on
Monday because of the U.S. Labor Day holiday, were down $1.06,
or 1.4%, at $72.49.
"The weaker than expected Chinese manufacturing PMI over the
weekend likely exacerbated concerns about the Chinese economy's
performance," said Charalampos Pissouros, senior investment
analyst at brokerage XM
"The Libya and Middle East stories are keeping a floor below
prices, leaving the door open to a further recovery in the
foreseeable future."
On Monday China reported new export orders fell for first time
in eight months in July and that prices of new homes rose in
August at their weakest pace this year.
In Libya, oil exports at major ports were halted on Monday and
production curtailed across the country, six engineers told
Reuters, continuing a standoff between rival political factions
over control of the central bank and oil revenue.
So far there is limited upside support from large production
disruptions in Libya, owing to the uncertainty over how long
those outages might last, said UBS analyst Giovanni Staunovo.
Libya's National Oil Corp (NOC) declared force majeure on its El
Feel oilfield from Sept. 2.
Total production had plunged to little more than 591,000 barrels
per day (bpd) as of Aug. 28 from nearly 959,000 bpd on Aug. 26,
NOC said. Production was at about 1.28 million bpd on July 20,
the company said.
Some supply is set to return to the market as eight members of
OPEC and affiliates, together known as OPEC+, are scheduled to
boost output by 180,000 bpd in October. The plan is likely to go
ahead regardless of demand worries, industry sources said.
"It remains to be seen how low prices can go before OPEC+
reacts, as most cartel members need prices above current levels
to come close to balancing budgets," said Panmure Liberum
analyst Ashley Kelty.
Continuing disruptions to supply flows from the Middle East are
also supporting the market. Two oil tankers were attacked on
Monday in the Red Sea off Yemen but did not sustain major
damage.
(Reporting by Arunima Kumar in Bengaluru, Colleen Howe in
Beijing and Emily Chow in Singapore; Editing by David Goodman)
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