Oil dipped below $104 per barrel on Monday as weak data from top energy consumer China muddied the oil demand outlook, overshadowing optimism stemming from a pickup in U.S. hiring.
Oil prices had risen in early trade on U.S. jobs data that showed a slight improvement, indicating the economy of the world's top oil consumer was healthier.
Brent oil dropped 64 cents to $103.92 a barrel by 1138 GMT, after climbing to $104.76 earlier. U.S. oil dropped 55 cents to $95.48 per barrel.
"We attribute the current price weakness to disappointing data from China which were published at the weekend," analysts at Commerzbank said in a note to clients.
Data over the weekend showed that China's economy is losing momentum, with May exports and domestic activity struggling to pick up.
China's implied oil demand edged up around 1 percent in May from a year earlier to nearly 9.5 million barrels per day, the lowest rate since September 2012, according to Reuters calculations.
Refinery production slipped to a nine-month low amid further signs of an economic slowdown.
"The weaker economic development in China is also likely to have contributed to the subdued (oil) demand... The current demand weakness in China argues against any upward revision of the estimates for global oil demand by the three leading energy agencies this week," Commerzbank said.
OPEC and the International Energy Agency (IEA) will release their monthly global oil demand reports on Tuesday, with the U.S. Energy Information Agency (EIA) to follow on Wednesday.
Oil price losses may be limited by the stronger U.S. job number and hopes the U.S. Federal Reserve would hold off on tapering its massive stimulus.
U.S. employers stepped up hiring by a little more than expected in May, but the jobless rate remained well above pre-recession levels and May marked the third straight month that payrolls rose by less than 200,000.
Prices also drew support from concerns about Sudan cutting oil exports from South Sudan.
The Buzzard oilfield in Britain's North Sea returned to full production following last week's outages, easing some supply worries.
Speculators raised their net long positions in Brent crude oil futures and net short positions in gasoil in the week to June 4, data from the IntercontinentalExchange (ICE) showed on Monday. (Additional reporting by Manash Goswami, Aardon Sheldrick and Rebekah Kebede; editing by James Jukwey)