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[SINGAPORE] Brent crude dipped towards US$66 a barrel on Monday as weak Chinese data stoked demand fears, while near-record supplies from OPEC producers reinforced worries about oversupply.
China, the world's second-largest oil consumer, saw its biggest drop in factory activity in a year to 48.9 in April, a private business survey showed on Monday. The sub-50 point level indicates a contraction compared with the previous month.
The data came on the heels of a top government think tank's forecast that China's economic growth could slow further to 6.8 per cent in the second quarter. "The Chinese data is weaker but it seems the oil market has had a limited reaction. What the market really wants to see is supply being cut to match the demand level," said Ric Spooner, chief market analyst at Sydney's CMC Markets.
Oil supplies from the Organization of the Petroleum Exporting Countries, which produces about 40 per cent of oil supplies, climbed 0.2 per cent to a more than two-year high of 31.04 million barrels per day (bpd) in April, boosted by production from Iraq and Saudi Arabia, a Reuters survey showed.
The increase in Opec supply has put output further above forecasts of demand for its oil in the first half of 2015.
Brent June crude futures dropped 24 cents to US$66.22 a barrel by 0238 GMT, after hitting its 2015 peak of US$66.93 on April 30.
US June crude declined 35 cents to US$58.80 a barrel. WTI hit its highest this year at US$59.90 on May 1.
Brent crude has recovered by more than 40 per cent since its near six-year low of US$45.19 a barrel in January, as geopolitical tension in the Middle East and declining US rig counts provided support.
Both Brent and US crudes posted their biggest monthly price rise in nearly six years in April.
But the US oil rig count is beginning to decline more slowly, after falling for a record 21 straight weeks to its lowest level since September 2010, in a possible sign that the collapse in drilling could be coming to an end.
Speculators cut their net long US crude futures and options in the week to April 28, the Commodity Futures Trading Commission said on Friday.