Oil fell 2 percent to below $69 a barrel on Monday, pressured by jitters over the pace of U.S. economic recovery and easing concerns about Iran and Nigeria.
U.S. crude for November traded down $1.45 to $68.50 a barrel by 11:45 a.m. EDT. London Brent fell $1.79 to $66.28 a barrel.
The market is realizing that supplies are on the heavy side and that it's harder and harder to justify oil's price level at this time, said Phil Flynn, analyst, PFGBest Research, Chicago. Last week's dismal job numbers spell weak demand going forward.
Doubts over an economic recovery resurfaced after data released on Friday showed U.S. employers cut 263,000 jobs in September and the employment rate had soared.
Slumping fuel demand in the United States and other developed countries sent crude off record highs over $147 a barrel last year, with traders looking to macroeconomic data for signs of a potential end of the recession that could boost consumption and draw down high oil inventories.
Data released Monday showed the U.S. service sector expanded in September for the first time since August 2008, growing at a faster rate than expected.
Further pressure on prices may come from easing tensions in Iran and Nigeria, which had lent support to prices at times in recent years. Both Iran and the United States described recent talks over Tehran's nuclear program as productive, with the OPEC nation allowing United Nations inspectors into a uranium enrichment plant.
In a further easing of tension, the last prominent Nigerian militant leader agreed to halt fighting in the oil-producing Niger Delta and surrendered his weapons on Sunday.
(Reporting by Matthew Robinson, Robert Gibbons, Gene Ramos in New York; Alex Lawler and Fayen Wong; editing by Jim Marshall)