Oil fell to a two-week low below $66 a barrel on Monday as investors became more cautious about the pace of global economic recovery and any revival in energy demand.
The market on Friday fell $3.01, or 4.3 percent -- the biggest loss since July 29 -- after the Reuters/University of Michigan Survey of Consumers showed confidence in early August dropped to the lowest since March.
It's a very weak market, continuing the weak tone on Friday, linked to falling stock markets and more bearish sentiment about demand, said Christopher Bellew, a broker at Bache Commodities.
U.S. crude oil futures fell $1.44 to $66.07 a barrel by 5:08 a.m. EDT. Prices hit an intra-day low of $65.69, the lowest since July 31. Brent crude lost $1.37 to $70.07.
Asian stocks slid as investors became more cautious about the pace of the global economic recovery, souring appetite for risky assets. European shares also fell, while the dollar rose against a basket of currencies.
Investors were torn between hopes China will help to pull the world economy out of recession and worries about a major correction in its stock market. Chinese shares fell 5.8 percent on Monday.
Oil's 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 the global economy had turned a corner and recovery would boost energy demand.
Japan's economy emerged from its longest recession in at least 60 years in the second quarter, but analysts said it will be a long road to a sustained recovery in the world's third largest oil consumer.
Although the hurricane season has arrived in the Atlantic, analysts said brimming crude stockpiles in the United States would limit the impact of a storm on oil prices.
Tropical Storm Claudette moved ashore along the U.S. Gulf Coast early on Monday and had swept through the Gulf of Mexico, bypassing the heaviest concentration of U.S. energy platforms.
The six-month hurricane season got off to a slow start with no storms in the first 2-1/2 months but intensified this weekend as three formed in just over a day.
(Reporting by Fayen Wong in Perth; Editing by William Hardy)