Oil prices fell below $67 a barrel on Monday, extending the previous session's 4.3 percent decline, as poor U.S. economic data clouded the outlook for a quick global recovery and prompted further profit taking.
Oil on Friday fell by $3.01, or 4.27 percent -- the biggest loss since July 29 -- after the Reuters/University of Michigan Survey of Consumers showed consumer confidence in early August dropped to the lowest level since March.
U.S. crude oil futures fell 61 cents to $66.90 a barrel by 0140 GMT, while London Brent crude fell 46 cents to $70.98.
Oil prices are still suffering from the hangover of last week's poor U.S. consumer sentiment and high crude inventory data. A fall in equities markets today would further weigh on oil, said Ben Westmore, a commodities analyst at the National Bank of Australia.
Weighed down by the weak U.S. consumer confidence data, the U.S. dollar index <.DXY> inched higher by 0.14 percent on Monday, while most Asian stocks fell, with Japan's Nikkei average <.N225> down 2 percent and South Korea's Kospi <.KS11> opening 0.17 percent lower.
Oil remains highly correlated with equity markets at 0.86, but the correlation with the U.S. dollar has fallen somewhat to 0.66, Mark Pervan, a commodities analyst at the Australia & New Zealand Bank, said in a research note.
Key housing data and producer prices due to be released on August 18 will offer further clues on the health of the U.S. economy, analysts said, although U.S. stocks could extend last week's retreat after four weeks of gains as the earnings season winds down.
Oil' steep decline on Friday brought it to a weekly loss of 4.8 percent, snapping a four-week streak of gains that were largely fueled by optimism that the global economy had turned a corner and recovery later this year would boost energy demand.
Although the hurricane season has arrived in the Atlantic, analysts say swelling crude stockpiles that are at their multi-year highs would limit the impact of a storm on oil prices.
U.S. Gulf of Mexico offshore oil patch output was unaffected by Tropical Storm Claudette, which was quickly passing far to the east of main production areas, oil companies said on Sunday.
The hurricane season has taken on a particularly ominous feel in the Gulf Coast region because two of the past four years have brought intense and destructive storms that disrupted operations at offshore platforms and coastal refineries, but many forecasts are for a mild hurricane season this year.
Separately, Iran's OPEC governor Mohammad Ali Khatabi said on Friday crude output increase is not on OPEC's agenda because of high levels of oil storage by consumer countries.
Crude oil speculators on the New York Mercantile Exchange decreased their net long positions in the week to August 11, according to data from the Commodity Futures Trading Commission released on Friday.
(Editing by Ben Tan)