The price falls come after front-month Brent and WTI prices posted their strongest monthly gains in years in May. Gains were boosted by OPEC crude production dropping to its lowest in two decades with demand is expected to recover as more nations emerge from coronavirus lockdowns.
"The focus is very much on OPEC+," OCBC economist Howie Lee said, referring to the grouping of OPEC and its allies including Russia. OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day (bpd) in May and June after the coronavirus pandemic ravaged demand.
"We might see a cautious pullback in (crude) prices given that downstream prices haven't caught up ... but if OPEC+ does come up with a three-month extension, there's a possibility that prices may hit the $40 level," Lee said.
Still, tensions between the United States and China weighed on global financial markets
while traders are also keeping an eye on riots over the weekend that have engulfed major US cities.
Saudi Arabia is proposing to extend record cuts from May and June until the end of the year, but has yet to win support from Russia, sources have told Reuters.
Algeria, which currently holds the OPEC presidency, has proposed an OPEC+ meeting planned for June 9-10 be brought forward to facilitate oil sales for countries such as Saudi Arabia, Iraq and Kuwait. Russia has no objection to the meeting being brought forward to June 4.
Meanwhile supply in North America is also falling as data from Baker Hughes Co showed that the US and Canada oil and gas rigs count dropped to a record low in the week to May 29.