- Oil prices fall U.S. data sparked fresh concerns about a slowdown in the global economy and rising crude supplies.
- Crude earlier hit two-month highs, bolstered by OPEC-led supply cuts and U.S. sanctions against Venezuela's petroleum industry.
- Market participants are also watching for developments surrounding the U.S.-China trade war.
Oil prices fell on Monday after U.S. data sparked fresh concerns about a slowdown in the global economy and rising crude supplies in the United States.
U.S. West Texas Intermediate crude hit a 2019 high of $55.75, its best intraday price since Nov. 21. WTI ended Monday's session 70 cents lower at $54.56 for a 1.3 percent loss.
Brent crude oil, the global benchmark, hit $63.63 a barrel, the highest since Dec. 7, before turning negative. Brent recouped most of its losses to trade 24 cents lower at $62.51 around 2:30 p.m. ET.
Weighing on oil markets, U.S. government data showed new orders for U.S.-made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.
"In a market that's looking for direction, there's concern that any slowdown in the manufacturing sector would slow down demand. Because the number was a little disappointing, it played into the slowing demand scenario," said Phil Flynn, oil analyst at Price Futures Group in Chicago.
Prices also dipped after data showed U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose by more than 943,000 barrels in the week to Feb. 1, traders said, citing data from market intelligence firm Genscape.
"I think that's why we've seen most of the WTI sell-off, and the sell-off in WTI has dragged down Brent, not quite as much as WTI," Edward Morse, global head of commodities research at Citigroup told CNBC's "Squawk on the Street."
The U.S. dollar also strengthened, making oil more expensive to holders of other currencies.
Prices have been buoyed by a new round of supply cuts from OPEC and its allies that began in January.
Russia has been in full compliance with its pledge to gradually cut its oil production, Russian Energy Minister Alexander Novak said in a statement on Monday, adding that production decreased by 47,000 barrels per day (bpd) in January from October.
The impact of OPEC+'s supply curbs has been boosted by U.S. sanctions on Venezuelan state-owned oil firm PDVSA. The sanctions will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said after examining details announced by the U.S. government.
"There's no sign of overhang in the crude oil markets," said Olivier Jakob, oil analyst at Petromatrix.
OPEC supply fell in January by the largest amount in two years, a Reuters survey last week found.
However, while OPEC and its allies are cutting output, the United States has expanded supply, with production most recently totaling 11.9 million bpd.
Market participants are also watching for developments surrounding the U.S.-China trade war, which has dragged on world markets as investors worry that the dispute could contribute to a potential global economic slowdown.
U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute, and there are hopes that the two sides will come to an agreement.
"Oil prices have lacked direction in today's trading session because of mixed market cues," said Abhishek Kumar, senior energy analyst at Interfax Energy in London. "Insufficient progress made in the US-China trade talks is weighing on prices."
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