Oil prices traded lower Tuesday as investors awaited cues from crude stockpile data later in the day and the upcoming central bank meetings in the U.S. and Europe.
Benchmark Brent crude futures dropped 0.4 percent to $79 a barrel, while WTI crude futures were down half 0.4 percent at $75.33.
Both benchmarks dropped over 1 percent on Monday after data showed a contraction in Chinese manufacturing activity in April, casting doubts about the country's economic recovery and raising worries about the outlook for energy demand.
Elsewhere, U.S. factory output contracted for the sixth straight month in April but pulled off a three-year low as new orders improved slightly and employment rebounded.
As inflation concerns ease, market participants await additional cues from major central bank meetings this week.
The U.S. Federal Reserve is expected to raise its benchmark interest rate by 25 basis points on Wednesday despite signs of an impending slowdown.
Fed chief Jerome Powell's post-decision press conference will be closely watched for comments around the future of monetary policy.
The Labour Department's closely watched monthly jobs report due on Friday also remains on investors' radar.
The European Central Bank (ECB) is widely expected to raise rates for a seventh straight meeting on Thursday and the big question is whether it will be a 25 or 50 bps rate hike.
Data from the industry body American Petroleum Institute is due later in the day and traders expect a drop in U.S. crude stockpiles.
