Brent crude edged lower towards $106 per barrel on Monday, weighed down by data which showed China's oil consumption slowed in 2013 and as Iran started implementing a nuclear deal with world powers.
Implied oil demand in China - the world's second-biggest oil consumer - rose a lack lustre 1.6 percent last year, or 150,000 bpd on the year, according to Reuters calculations based on preliminary government data.
(Read more: China economy grows 7.7% in fourth quarter)
"The long term oil demand trend is certainly not what it used to be," said Alex Yap, oil analyst at Facts Global Energy.
"But I think 2014 could be better with new refineries starting and Strategic Petroleum Reserve stockpiling," he said.
Brent crude for March delivery was down 31 cents at $106.16 per barrel at 0816 GMT. The March contract had closed up 73 cents on Friday.
U.S. crude for February delivery was trading 70 cents lower at $93.67 per barrel, after settling up 41 cents at a two-week high on Friday.
The 1.6 percent growth in China's implied oil demand lagged a forecast by the International Energy Agency for 2013 oil demand growth at 3.8 percent, but was in line with a forecast by the country's top oil firm China National Petroleum Corporation (CNPC).
Implied oil demand stood at 10.06 million barrels per day (bpd) in December, down 7.5 percent from a record high 10.88 million bpd a year earlier, but up 1.2 percent from November.
Chinese economic data gave cause for optimism. The economy grew 7.7 percent between October and December, compared with 7.8 percent in the previous three months and slightly ahead of market expectations for growth of 7.6 percent.
"The data is a cause for relief, as it eases some of the fears over the Chinese economy," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
(Read more: What's next for China? Economists are split)
U.S. crude saw low trading volumes on Monday. Floor trading will be closed and there will be no settlement on the New York Mercantile Exchange due to the Martin Luther King, Jr. Day holiday.
Iran has halted its most sensitive nuclear activity under a ground-breaking deal with world powers, a confidential U.N. atomic agency report obtained by Reuters showed, paving the way for the easing of some Western sanctions and potentially boosting global oil supply.
The mutual concessions are scheduled to last six months, during which time the parties aim to negotiate a final accord defining the permissible scope of Iran's nuclear activity.
Sanctions have cut Iran's oil exports by more than half over the past 18 months to about 1 million barrels per day (bpd). Tehran has said it will take six months after sanctions are lifted to return to full oil output capacity of 4 million bpd.
Expectations of more supply from Libya could also keep Brent prices under pressure this week. The Libyan government said it plans to remove protesters who have seized eastern ports used for oil exports within the next few days.
The three ports, which together accounted for 600,000 barrels per day of exports, have been occupied by heavily-armed rebels since the summer.