HOUSTON - Oil prices were trading lower on Monday as rising U.S. output, a weaker physical market and recent dollar strength added to the pressure from a widespread decline across equities and commodities.
Brent crude futures were down 47 cents at $68.11 a barrel at 11:46 a.m. EST (1647 GMT) after hitting a one-month low of $67.51 a barrel earlier in the session.
U.S. West Texas Intermediate (WTI) crude was 63 cents lower at $64.82.
Friday's U.S. jobs report showing the fastest wage growth in nearly nine years exacerbated a broader market sell-off that was already under way as European stocks backed off record highs, and a rising dollar dented commodities and oil prices.
"These concerns that are bedevilling the stock market are finding their way into WTI and Brent. But there's still underlying strength in this market," said John Kilduff, partner at Again Capital LLC.
Wall Street's three major indexes logged their biggest weekly losses in two years on Friday after a strong payrolls report. The S&P 500 and the Dow had their worst weeks since early January 2016 while the Nasdaq recorded its worst week since early February 2016.
"It's been a long time since the (stock) market has witnessed a 2 to 3 percent reversal. If this gets extended to say 5 to 6 percent, sentiment-wise it will probably feel much worse than it actually is," Semaphore Macro economist Ioan Smith said.
Although volatility in oil is rising, it is still close to its lowest in three years.
The physical crude market has deteriorated in the last few weeks, as the price of North Sea oil hit its lowest in eight months, while Russian Urals crude changed hands last week at its lowest in a year.
Saudi Arabia over the weekend said it had cut the official selling prices for its crude to European customers.
Meanwhile, maintenance and turnarounds at oil refineries are getting underway, which could impact oil demand. Motiva Enterprises LLC, the largest U.S. refinery, started a planned one-month overhaul on Monday of its key crude processing unit at its 603,000 barrel-per-day facility in Port Arthur, Texas.
"Naturally, you get (crude) builds on refinery maintenance, but demand is starting to pick up a bit," said John Macaluso, analyst at Tyche Capital Advisors.
Adding to the pressure on oil, which hit its highest in nearly three years two weeks ago, has been rising U.S. crude production, which could threaten the Organization of the Petroleum Exporting Countries' effort to support prices.
U.S. government data last week showed output climbed above 10 million barrels per day in November for the first time since 1970.
U.S. energy companies added oil rigs for a second week in a row last week.