Brent crude fell below $97 per barrel on Monday, its lowest level in more than two years, as weak Chinese economic data cut the prospect for demand at a time of abundant supply, while expectations that the Federal Reserve will provide new details this week about its plans to raise interest rates lifted the dollar.
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Chinese factory output grew at the weakest pace in nearly six years in August as growth in other key sectors also cooled, raising fears the world's second-largest economy, and the biggest energy consumer, may be at risk of a sharp slowdown.
The Brent contract for October delivery, which expired on Monday, fell as low as $96.21 a barrel, the weakest price since July 2012. The contract later pared losses to settle down 46 cents at $96.65 a barrel. The November contract for Brent fell 8 cents a barrel to settle at $97.88.
News that Russian Energy Minister Alexander Novak will meet OPEC officials on Tuesday in Vienna was cited as helping pull oil prices off lows.
"Maybe the pullback on the China data was a little overdone," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut, echoing the sentiment of other analysts.
U.S. crude rose 65 cents to settle at $92.92 a barrel.
The dollar rose on expectations that the Fed's policy-setting Federal Open Market Committee will affirm the U.S. economy's steady recovery at the end of its two-day meeting on Wednesday and possibly provide a timeline as to when it would start to raise rates.
U.S. manufacturing output fell for the first time in seven months in August, but the underlying trend remained consistent with steadily rising factory activity. That was confirmed by other data showing factory activity in New York state jumped to its highest level in nearly five years in September.
The euro fell 0.2 percent against the dollar to $1.2938 , while the dollar index, a measure of the dollar's strength against a basket of major currencies, traded flat at 84.240. The Japanese yen slipped 0.13 percent against the dollar to 107.18 yen.
Most U.S. stocks fell, dragged lower by the tech sector as investors made room in their portfolios for the planned initial public offering of Chinese e-commerce company Alibaba later this week. Biotech shares also weighed on the Nasdaq.
"The Alibaba IPO is going to have a big effect, drawing money out of some stocks, and how it performs can help say a lot about the tech sector," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
Oil giant Chevron Corp rose 1.29 percent at $124.24 and contributed the most points to the Dow's rise.
The Dow Jones industrial average closed up 43.63 points, or 0.26 percent, to 17,031.14. The S&P 500 fell 1.41 points, or 0.07 percent, to 1,984.13, and the Nasdaq Composite lost 48.70 points, or 1.07 percent, to 4,518.90.
MSCI's all-country world index of equity performance across 45 countries fell 0.19 percent to 425.36.
In Europe, the FTSEurofirst 300 index of top regional shares closed down 0.05 percent at 1,382.32.
U.S. Treasury debt prices rose on bargain hunting as fixed-income investors focused on signs of spotty economic growth, which could slow the Fed's shift away from loose monetary polices.
The benchmark 10-year Treasury note rose 7/32 in price to yield 2.5887 percent.
(By Herbert Lash; Additional reporting by Patrick Graham in London; Reporting by Herbert Lash; Editing by Jonathan Oatis and Leslie Adler)