Investing.com - Oil prices turned lower on Monday, retracing early gains following reports that top exporter Saudi Arabia is due to restore oil production as soon as next week, while signs of weakness in Europe’s economy also weighed.
Global benchmark Brent crude futures were down 0.7%, or 46 cents, at $63.84 a barrel by 7:51 AM ET (11:51GMT), after rising as high as $65.18 earlier.
U.S. crude futures fell 0.72% or 42 cents to trade at $57.96 per barrel from an intra-day high of $58.87.
Oil turned lower after Reuters reported that Saudi Arabia has already restored around 75% of crude output lost in the Sept. 14 attack on the Abqaiq processing facility and Kurais oilfield.
Prices had climbed earlier in the session amid doubts over how quickly output could be restored.
Prices were also pressured lower by data showing the euro zone economy nearly stalled at the end of the third quarter, amid a deepening manufacturing recession in Germany, the bloc's largest economy.
"Oil prices are tracking European markets lower this morning, understandably knocked by the woeful manufacturing data from the bloc and the implications for global growth and demand," said Craig Erlam, analyst at OANDA.
Brent has still gained about 18% this year, helped by a supply-limiting pact led by the Organization of the Petroleum Exporting Countries, although concern about slowing economic growth has limited the advance.
Tension in the Middle East has escalated since the attack on the Saudi facilities. The Pentagon has ordered additional U.S. troops to be deployed in the Gulf region to strengthen Saudi Arabia's air and missile defenses.
Britain believes Iran was responsible for the attack and will work with the United States and European allies on a joint response, Prime Minister Boris Johnson said on Monday. The United States and Saudi Arabia have already blamed Iran, which denies responsibility.
The attacks, which sharply reduced the spare capacity available in Saudi Arabia, have refocused investor attention on the prospect of other supply disruptions in other OPEC producers like Nigeria, Libya and Venezuela. Until the attacks, investors had been less concerned about supply risks thanks to the Saudi cushion.
"The geopolitical risk premium has returned with a vengeance and supply-side developments have been thrust back into the spotlight," Stephen Brennock of oil broker PVM said.
"While Saudi oil facilities smolder, the potential for fresh outages in Nigeria, Libya and Venezuela continues to hang over the market."
--Reuters contributed to this report