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Oil prices slipped on Monday, weighed down by Moody's downgrade of the US sovereign credit rating and official data that showed a slow down in the pace of China's industrial output and retail sales.
Front-month Brent crude futures edged down 35 cents, or 0.5 per cent, to $65.06 a barrel by 0440 GMT while US West Texas Intermediate crude dropped 26 cents, or 0.4 per cent, to $62.23 a barrel. The front-month June WTI contract expires on Tuesday and the more-active July contract fell 31 cents, or 0.5 per cent, to $61.66 a barrel, according to Reuters.
Both contracts rose more than 1.0 per cent last week after the US and China, the world's two biggest economies and oil consumers, agreed to a 90-day pause on their trade war with sharply lower import tariffs.
Moody's downgrade raises questions about the outlook for the US economy, and China's data points to a bumpy road ahead for any economic recovery, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
The Moody's downgrade may not impact oil demand directly, but it does create more sober market sentiment, she said.
Moody's downgraded the US sovereign credit rating on Friday over the country's growing $36 trillion debt pile, a move that could complicate President Donald Trump's efforts to cut taxes.
Meanwhile in China, the world's largest crude oil importer, official data showed growth in industrial output slowed in April, though still fared better than economists had expected.
While Beijing and Washington reached an agreement last week to roll back most tariffs imposed on each other's goods, the short-term truce and Trump's unpredictable approach continue to cast a shadow over China's export-driven economy, which still faces 30 per cent tariffs on top of existing duties.
Meanwhile, the outcome of Iran-US nuclear talks remains uncertain, limiting losses in oil prices.
US special envoy Steve Witkoff said on Sunday that any deal between the United States and Iran must include an agreement not to enrich uranium, a comment that swiftly drew criticism from Tehran.
"There was a lot of hope being built into those talks," IG market analyst Tony Sycamore said.
"Realistically, Iran was unlikely to ever willingly agree to peacefully give up its nuclear ambitions, which it has always maintained as being non-negotiable. More so after the collapse of its proxies, which have acted as a buffer in the past between itself and Israel," he said, referring to Hamas, Hezbollah and the Houthis.
In Europe, tensions between Estonia and Russia rose after Moscow detained a Greek-owned oil tanker on Sunday after it left an Estonian Baltic Sea port.
In the US, producers cut the number of operating oil rigs by 1 to 473 last week, the lowest since January, Baker Hughes said in a weekly report, as they continued to focus on spending cuts that could slow US oil output growth this year.