Benchmark Brent crude was down 89 cents, or 1.4%, to $64.31 a barrel at 11:29 a.m. EDT (1529 GMT), while U.S. crude shed 44 cents, or 0.8%, to $56.99 a barrel.
Last week, Brent climbed 5% and U.S. crude surged 10% after Iran shot down a U.S. drone on Thursday in the Gulf. This added to tensions stoked by attacks on oil tankers in the area in May and June that Washington has blamed on Iran.
Iran denies any role in the tanker attacks.
U.S. President Donald Trump said he called off a retaliatory attack on Iran at the last minute after the drone was downed, but Washington has said it will still step up sanctions on Tehran.
“I think some of the risk premium that got built in because of U.S. tensions with Iran is easing a bit,” said John Kilduff, a partner at Again Capital Management in New York. “I think we’re also starting to see the economic concerns and demand concerns re-emerge for the market.”
The International Energy Agency (IEA) said this month it had revised down its estimate for crude demand growth in 2019, citing the U.S.-China trade row.
Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas, Texas, added to worries about slipping demand for crude oil.
Hopes are waning for progress in Sino-U.S. trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping.
“The oil market … is turning its attention to the upcoming G20 meeting and the (limited) prospect for a deal, and with that, renewed focus on slowing demand growth,” said Saxo Bank’s head of commodity strategy Ole Hansen.
Supply still looks to remain relatively tight, as the Organization of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, appear likely to extend a deal on curbing output when they meet on July 1-2 in Vienna, analysts said.
Russian Energy Minister Alexander Novak said on Monday that international cooperation on crude production had helped stabilize oil markets and was more important than ever.
But he also voiced concerns about demand, saying extending the deal on supply cuts would depend in part on “the consumption of oil in the third and fourth quarters, (and) the pace of growth of the world economy”.
The United States Oil Fund LP (USO) was trading at $11.87 per share on Monday afternoon, down $0.10 (-0.84%). Year-to-date, USO has declined -1.17%, versus a 10.69% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Reuters .