Front-month Brent crude was trading at $44.60 per barrel at 0207 GMT, down 51 cents, or 1.1 percent, from their last settlement.
U.S. West Texas Intermediate (WTI) futures were also down over half a dollar, or 1.3 percent, at $43.17 a barrel.
Analysts said the price drops were a result of cashing in after three weeks of rising prices.
“I guess (there’s been) some profit taking after a strong rally into the end of last week,” said Virendra Chauhan of Energy Aspects in Singapore.
Market data shows that the amount of open positions betting on rising WTI prices rose to levels last seen in June 2015 last week, while bets taken out in expectation of falling prices fell close to 2016 lows.
A jump in the dollar on Friday against a basket of other leading currencies on expectations that Japan will further extend its aggressive monetary easing through negative interest rates, also dented oil, traders said.
A stronger dollar, in which oil is traded, makes fuel imports for countries using other currencies more expensive, potentially hitting demand.
Monday’s oil price drops came despite another cut in the U.S. rig-count that brings activity down for a fifth straight week and to levels last seen in November 2009.
A total of 343 rigs were drilling for new oil last week. That compares to over 700 this time last year, according to oil services company Baker Hughes on Friday.
Energy firms have sharply reduced oil and gas drilling since the collapse in crude markets that cut prices by as much as 70 percent to 13-year lows earlier this year.
Some analysts warned of a fall in future oil demand as a downside risk to prices.
“There is renewed uncertainty around future demand given the slowdown in China’s economy, improvements in fuel efficiency, rise of electric vehicles, and climate change. The strength of global demand will play a significant role in the recovery of oil prices from decade lows,” Bernstein Research said on Monday.
For the rest of the decade, Bernstein said “we expect demand to reach 101.1 million barrels per day by 2020, an increase of 6.6 million barrels per day,” compared with 2015. (Courtesy Reuters)