Oil fell more than 3 percent to $64 a barrel on Monday as doubts over a potential rebound in the global economy spurred investor risk aversion.
U.S. crude traded down $2.27 from Thursday's close to $64.46 a barrel by 11:57 a.m. EDT, after touching a five week low of $63.40. U.S. markets were closed on Friday for the Independence Day holiday weekend.
London Brent crude fell $1.27 from Friday's close to trade at $64.34 a barrel.
Optimism that an economic recovery could bolster has helped lift crude off December lows below $33 a barrel. Recent weak economic data -- including a poor U.S. jobs report last week -- has weighed on markets, however.
U.S. stock markets <.N> dipped early, despite data showing the U.S. service sector contracted last month but at a decelerating pace, with activity at the highest since September 2008.
A lot of people are nervous about the economy and now, everybody wants to get out of the exits at the same time, said Phil Flynn, PFGBest Research, Chicago.
We are seeing this in the stock markets, the gold market and markets for other commodities, including oil. We did get a little bit of support in the latest ISM (service sector) numbers, but all in all, I feel that demand will be on a downward trend in the next couple of months, Flynn added.
The yen and the U.S. dollar gained broadly as investors shunned risk and bought currencies perceived to be safe, adding pressure to commodities denominated in greenback.
The Reuters-Jefferies CRB index <.CRB>, a global commodities benchmark, gave up 1.45 percent in early activity.
Crude has found some support due to attacks on attacks on oil installations in OPEC member Nigeria.
Nigeria's main militant group said on Monday it had sabotaged a Chevron
France and Britain called for action to curtail oil price volatility as part of a move toward tougher global governance to prevent a return to economic problems that existed before the financial crisis.
Crude prices hit a record $147 a barrel last July before crashing to $32.40 a barrel in December, as the economic crisis battered global fuel demand.
(Reporting by Matthew Robinson, Gene Ramos, and Robert Gibbons in New York; Alex Lawler in London; Fayen Wong in Perth; Editing by Marguerita Choy)