Oil fell more than $1 a barrel toward $57 on Monday, pressured by weaker European equities, a firmer dollar and caution over prospects for a global economic recovery.
U.S. crude was down $1.32 at $57.31 a barrel by 1025 GMT (6:25 a.m. EDT). London Brent crude was down $1.36 at $56.78.
The oil price hit a six-month high of $58.75 on Friday after the U.S. economy shed fewer-than-expected jobs in April and government stress test results removed some uncertainty over the health of major American banks.
A more optimistic mood among investors that the worst of the recession might be over has helped boost global equity markets and oil has followed.
It all depends on the stock markets, said Christopher Bellew, of Bache Commodities Ltd.
We would need a substantial deterioration in equity markets for oil to go back into its old range. We seem to have broken into a new range of around $55-$59 a barrel, he said.
Oil, which has plummeted from a record high above $147 a barrel reached last year, has edged higher over the past three months alongside a rally in equity markets that seem to be signaling that the global recession might be easing.
But oil had been confined to a narrow range below $55 a barrel in March and April.
Oil prices are driven by perceptions that the economic outlook is less pessimistic that previously thought, said David Moore, a commodities strategist at Commonwealth Bank of Australia. But the growth numbers we could be seeing from developed economies may not justify such price levels.
Encouraging news from China, the world's second biggest energy consumer, offered oil some support.
A top Chinese central banker said the government's stimulus plan had worked better than expected, while crude imports data showed a spike in demand.
China's April crude oil imports saw the first monthly increase of the year and hit the second-highest record on a daily basis, providing more evidence that oil demand in the country was picking up.
(Additional reporting by Alex Lawler in London and Fayen Wong in Perth; editing by James Jukwey)