Crude oil prices slipped 1 percent on Monday in subdued trading after a long Easter holiday weekend, on news of rising U.S. shale production and profit-taking following three straight weeks of gains.
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On Monday, the Energy Information Agency (EIA) said U.S. shale production in May was set for its biggest monthly increase in more than two years, adding to worries that these increases would undermine efforts of the world's top producers to rein in a glut.
Robert Yawger, director of energy futures at Mizuho Americas said market conditions encouraged profit taking. Speculators in the week to April 11 also increased bets on strong performance in both contracts.
"The market was overbought so these people are definitely booking profits at this point," Yawger said.
Benchmark Brent crude futures ended the session 53 cents lower at $55.36 while U.S. West Texas Intermediate (WTI) crude futures settled down 53 cents at $52.65 a barrel.
Volumes were thin, with about 152,000 Brent futures contracts and about 296,000 WTI contracts changing hands, less than half of Thursday's trading volumes.
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With financial markets closed across Europe, the focus was on geopolitical tensions.
The Organization of the Petroleum Exporting Countries will meet on May 25 to consider extending output cuts beyond June to reduce a glut that has depressed prices. Iran fed hopes that OPEC and non-OPEC producers would extend the cuts, but Saudi Arabia's energy minister said it was too early to discuss an extension.
"While the Saudis and the Russians have been complying with their cuts we've seen Iraq and a number of other countries produce more than their share of the quota," Andrew Lipow, president of Lipow Oil Associates in Houston, said.
"So that gives the market pause at how effective they're going to be at taking oil out of the market."
Another source of instability is in North Korea. U.S. Vice President Mike Pence on Monday warned North Korea that U.S. strikes in Afghanistan and Syria, one of North Korea's few close allies, showed that the country should not test the resolve of President Donald Trump.
Fighting in Libya has cut oil output, but state oil company National Oil Corporation has reopened at least one field. <RIG/U>
Many analysts remained positive on oil prices.
"We remain constructive on oil prices for the balance of 2017 as second quarter 2017 should see markets tighten as a result of the current OPEC/non-OPEC deal whilst an expected extension of the deal on May 25th should keep oil inventories drawing in the second half of the year," Citi analysts said in a note.
"This should push Brent to $60-65 per barrel."
(Additional reporting by Libby George in London, Aaron Sheldrick in Tokyo; editing by David Gregorio and Richard Chang)