Oil prices fell nearly 2 percent on Monday after No. 3 consumer Japan suffered an economic contraction in the second quarter and China's slowdown continued to weigh on oil market sentiment.
The dollar also strengthened following the fastest pace of growth in U.S. industrial output in eight months, making greenback-denominated commodities, including crude, less affordable for holders of other currencies such as the euro.
U.S. crude, or West Texas Intermediate (WTI), settled down 63 cents, or 1.5 percent, at $41.87 a barrel. Expiring options trade in U.S. crude bumped up the market's volume to above 160,000 lots by midmorning, versus Friday's total of about 300,000 lots.
Brent futures for October were down 50 cents at $49 a barrel. It earlier hit a session low of $48.35, about $3 above its January low of $45.19.