LONDON: Brent crude extended losses after weak US and Chinese economic data fanned fears of economic slowdown and lower demand for oil, but it bounced off a 16-month low below $96 a barrel hit earlier on Monday as a weaker dollar offered a buying opportunity.
Brent crude was trading 87 cents lower at $97.56 a barrel by 1405 GMT, having briefly touched $95.63, its lowest since January 2011, in continued repercussions from the unexpectedly feeble figures issued last week.
US crude was 36 cents lower at $82.87 a barrel by the same time, having flipped into positive territory and back.
Olivier Jakob with Petromatrix said any bounce could be short lived.
"There is a risk for further liquidation," he said. "Right now, many are trying to protect themselves from falling prices."
The euro climbed to a session peak against the dollar and the yen as the New York session picked up pace on speculation that European leaders will arrive at a plan to ease the euro zone debt crisis.
Analysts cautioned that there was no definitive news to drive the euro higher.
European shares also bounced following a sharp sell off last week. The EuroSTOXX 50 stock index rose slightly, having opened slightly lower.
However the oil market continued to be swayed by last week's news showing US job growth stumbled in May and the jobless rate rose for the first time in nearly a year. Also a report from No. 2 oil consumer China indicated a slowdown in its manufacturing sector.
Oil ended May with the biggest monthly fall since December 2008, also propelled lower by Europe's ever-deepening debt crisis.
Speculators cut their net long positions in Brent crude and US crude futures in the week to May 29, figures separately issued by the Intercontinental Exchange (ICE) and US Commodity Futures Trading Commission (CFTC) showed.
Several monetary policy meetings are due this week, including one of the European Central Bank on Wednesday and the Bank of England on Thursday, with investors watching for clues on how they will address global growth issues.
US Federal Reserve Chairman Ben Bernanke will testify on Thursday before a congressional panel about the state of the US economy.
Economic worries and decades-high crude production from OPEC power Saudi Arabia have overshadowed the supportive effect on oil prices of disruption of Iranian supplies due to Western sanctions against Tehran.
"With maximum production out of OPEC and global inventories built up, we are not likely to get a shortage situation," said Victor Shum, senior partner at oil consultancy Purvin & Gertz. "Saudi Arabia has definitely prepared for the possible loss of Iranian supplies."
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