Oil prices dip on mounting demand fears

New York's main contract, West Texas Intermediate (WTI) crude for delivery in June, lost 77 cents to close at $103.11 a barrel.

Brent North Sea crude for June inched down five cents, settling at $118.71 a barrel in London trade.

GFT Markets strategist Fawad Razaqzada said there was growing uncertainty over the political situation across Europe as French President Nicolas Sarkozy appeared likely to his reelection bid and the Dutch prime minister, Mark Rutte, resigned after his government failed to reach agreement over austerity measures.

"In addition, China's HSBC Manufacturing PMI contracted for the sixth successive month while manufacturing and services PMIs for Germany, France and the whole eurozone were weak, and suggest that a deeper and more widespread recession across the area is likely," said Razaqzada.

"These factors suggest that demand for crude could weaken," the analyst said.

European equities tumbled on Monday as fears over the eurozone crisis resurfaced and investors were spooked by first-round results in France's presidential vote, won by Socialist Francois Hollande.

Also weighing heavily were disappointing economic data signaling the 17-nation eurozone was heading for recession.

In Asia, HSBC's China purchasing managers index (PMI), which measures factory output, rose to 49.1 in April from 48.3 in March, still in contraction territory.

China's economy is closely watched by oil traders as it is the world's largest energy-consuming nation.

In Europe, a key survey showed that eurozone private-sector activity sank the most in five months in April, another sign of recession in the 17-nation monetary union.

The composite PMI compiled by the London-based research firm Markit fell to 47.4 in April from 49.1 in March.