Crude oil futures gave back some of the previous week's massive gains on Monday, as traders cashed out of the market after prices scored their biggest two-day percentage gain since 2009 last week.
On the ICE Futures Exchange in London, Brent oil for October delivery slumped $1.69, or 3.37%, to trade at $48.37 a barrel during U.S. morning hours.
Brent futures rallied to $50.98 on Friday, the strongest level since August 11, before closing at $50.05, up $2.49, or 5.24%. On Thursday, Brent rallied $4.42, or 10.25%, only a few days after hitting a six-year low of $42.23.
London-traded Brent futures jumped $4.70, or 10.1%, last week, the first weekly gain in nine weeks, as traders returned to the market to close out bets on lower prices, a move known as short-covering.
Elsewhere, crude oil for delivery in October on the New York Mercantile Exchange declined $1.34, or 2.96%, to trade at $43.88 a barrel.
On Friday, Nymex oil prices jumped to $45.90, the most since August 11, before ending at $45.22, up $2.66, or 6.25%. On Thursday, futures soared $3.96, or 10.26%. New York-traded oil sank to a six-year low of $37.75 on August 24.
Nymex prices rallied $4.92, or 11.79%, last week, the largest weekly percentage gain since March 2009.
Crude oil prices have been under heavy selling pressure in recent months, as ongoing concerns over a glut in world markets drove down prices.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Worries over high domestic U.S. oil production are likely to remain in focus after industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by one last week to 675, the sixth straight weekly gain.
The rig count dropped for 29 straight weeks before rebounding modestly in recent weeks.
Meanwhile, concerns over the health of China's slowing economy and worries that the Federal Reserve will hike rates at its next policy meeting in September also weighed.
Market players looked ahead to a pair of manufacturing reports due out of China on Tuesday for further hints over the strength of the world's second largest economy.
The official China manufacturing purchasing managers' index was expected to fall to 49.7 in August from 50.0 in July.
Meanwhile, the final reading of the Caixin/Markit manufacturing purchasing managers’ index was forecast to inch up to 47.2 from a preliminary reading of 47.1, which was the lowest since July 2013.
A reading below 50.0 indicates industry contraction.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Investors also looked ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
Comments by Federal Reserve Vice Chairman Stanley Fischer on Friday suggested that the door was still open for a rate hike at the Fed's next meeting due to take place September 16-17.
Fischer said that the case for a rate increase in September was "pretty strong", though it was still too soon to say what the central bank might do.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
