- Crude oil futures dipped on Monday after earlier trading near more than three-year highs.
- The U.S. oil rig count hit a three-year high, pointing to rising output.
- A rebound in stock markets and escalating Saudi-Iran tensions provided support.
- China has launched the long-anticipated Shanghai crude oil futures.
Crude oil futures slipped on Monday as investors cashed in some profits from last week's strong rise, but concerns about Saudi-Iran tensions kept losses in check.
U.S. West Texas Intermediate (WTI) crude futures ended Monday's session down 33 cents to $65.55, backing down from the session peak of $66.55, which was just a few cents shy of a more than three-year high.
Brent crude futures were down 25 cents at $70.20 a barrel at 2:27 p.m. ET. The contract earlier rose to $71.05, the highest level since Jan. 25, when Brent hit a three-year high of $71.28.
Last week, Brent gained 6.4 percent and WTI rose 5.7 percent, the strongest weekly gains since July.
"I don't see anything extraordinarily bearish in the market today. I think some folks here are just...happy to take profits," said Bob Yawger, director of energy futures at Mizuho in New York.
Although crude and product futures slipped on Monday, most share prices for energy companies and refiners in particular were up, Yawger said. The S&P Energy Index was up nearly 0.8 percent.
Global stocks came off six-week lows on optimism that the United States and China are set to begin trade talks , easing fears about a trade war. Analysts had been concerned that a trade war could hurt oil demand.
U.S. President Donald Trump last week signed a memorandum that could impose tariffs on up to $60 billion of imports from China.
"The (oil) market is pulling back after pushing strongly high last week. I think the $70 level in Brent, $67 for WTI ... start to trigger worries of increased U.S. production levels," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
Crude was also pressured by a rise in the number of active U.S. oil rigs to a three-year high of 804, implying further rises in production. U.S. oil output has already jumped by a quarter since mid-2016 to 10.4 million barrels per day (bpd).
"With US crude production likely to be close to 10.5 million bpd by now and NGL (natural gas liquids) output also increasing strongly, there is a clear chance that year-on-year supply growth in the U.S. could at least temporarily hit 2 million bpd over the summer months," JBC said.
The market found some support from rising Middle East tensions.
Saudi air defences shot down seven ballistic missiles fired by Yemen's Iran-aligned Houthi militia on Sunday, some of which targeted Saudi capital Riyadh.
"Geopolitics and growing concerns about the United States leaving the Iran [nuclear] deal lifted oil prices back towards $70 per barrel," said Norbert Rucker, head of macro and commodity research at private Swiss bank Julius Baer.
In Asia, Shanghai crude oil futures made a strong debut in terms of volume as investors and commodity merchants bought into the world's newest financial oil trading instrument.
Hedge funds and other money managers raised their net long U.S. crude futures and options positions in the week to March 20 after two weeks of cutting bullish bets, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
— CNBC's Tom DiChristopher contributed to this report.