Oil ended lower in lacklustre trading on Monday with geopolitical supply risk lending some support to Brent crude oil but weak demand in China setting the overall market tone.
Brent crude oil settled 61 cents lower at $103.95 per barrel, after climbing to $104.76 earlier and trading as low as $103.66. U.S. oil ended the day 26 cents lower at $95.77 per barrel, after trading between $95.19 and $96.25.
China's economy is losing momentum, with May exports and domestic activity struggling to pick up.
Refinery production dropped to a nine-month low and implied oil demand in the world's number two oil consumer in May rose at its lowest rate since September 2012, compared with the year-earlier month, according to Reuters calculations.
"The first half of this year's demand has been disappointing," said Vikas Dwivedi, energy strategist with Macquarie Group in Houston, Texas. "Demand growth, especially diesel demand growth is lighter than we've been thinking."
Civil unrest in African nations like Libya and Nigeria, which funnel light, sweet crude oil into the global market are a concern for the market, Dwivedi added.
Libya's Marsa El Hariga terminal has been shut for more than 20 days due to protests. Stability in Nigeria, Africa's second-largest economy and top oil producer, is under threat from Islamist groups such as Boko Haram.
Geopolitical risk has kept speculators interested in Brent, said brokers. The group raised their net long positions in Brent crude oil futures in the week to June 4 to their highest level in more than three months.
Prices also drew some support from concerns about Sudan cutting oil exports from South Sudan.
Oil prices were also supported by the U.S. dollar which pared gains made earlier in the session. Oil prices tend to move in the opposite direction to the dollar, so a weaker dollar means higher oil prices.
The dollar weakened after a top Federal Reserve official said that low U.S. inflation means the government can continue its massive bond buying program.
U.S. oil prices rose to a two-week high on Friday after a report on non-farm payrolls showed a slight improvement in hiring. Trading volumes on Friday in the U.S. front-month crude oil contract were at their highest level since November 2012, according to Reuters data.
On Monday, the CME Group reported record daily trading volume for New York Mercantile Exchange Brent crude oil futures on Friday.
But large stockpiles of U.S. crude and concerns about weak demand continue to keep a cap on prices, analysts said.
U.S. stockpiles of crude and production are at or near record highs. OPEC and the International Energy Agency (IEA) will release their monthly global oil demand reports on Tuesday, with the U.S. Energy Information Administration (EIA) to follow on Wednesday. (Additional reporting by Ron Bousso in London, Manash Goswami, Aardon Sheldrick and Rebekah Kebede; editing by James Jukwey, Andrew Hay and Chizu Nomiyama)