West Texas Intermediate U.S. crude futures (WTI) traded at $76.09 a barrel, 23 cents, or 0.3% lower, while Brent crude futures were down 30 cents, or 0.36%, at $82.86 a barrel at 0411 GMT.
Both benchmarks closed more than 90 cents higher on Friday.
The dollar hovered near a seven-week peak on Monday after a slew of strong U.S. economic data reinforced the view that the Federal Reserve will have to raise interest rates further and for longer.
A firm dollar makes commodities priced in the U.S. currency more expensive for holders of other currencies.
“Crude continues to take direction from the sentiment in the broader financial markets,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Fears of a hawkish Fed returned to the fore on Friday after the personal consumption expenditures (PCE) price index, shot up 0.6% last month after gaining 0.2% in December.
“If risk-aversion continues to grow, crude will likely come under renewed pressure,” said Hari.
Adding to the downside pressure, U.S. crude oil inventories surged to the highest level since May 2021 last week, data from the Energy Information Administration (EIA) showed.
“The EIA data continue to raise more questions instead of providing clarity on markets,” analysts at the consultancy Energy Aspects said in a note, referring to the steep supply adjustment in the data that contributed to the build.
On supply side, Russia plans to cut oil exports from its western ports by up to 25% in March versus February, exceeding its previously announced production cuts of 5% of its output during the month.
Oil prices have fallen by about a sixth in the year since Feb. 24, 2022, when Russian troops first marched into Ukraine.
Russia halted supplies of oil to Poland via the Druzhba pipeline, the chief executive of Polish refiner PKN Orlen said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.
Two weeks after the invasion, prices surged to a record high of nearly $128 a barrel over supply concerns but have since cooled over fears of a global economic slowdown.
Separately, investors are bracing for China’s manufacturing surveys this week for a clear direction on oil demand. China is holding its annual parliamentary meeting from this weekend and will see new economic policy targets and policies.
“We expect the government to reiterate the priority of supporting growth and call for more policy support,” Ning Zhang, senior China economist at UBS Investment Bank, said in a note.
(Reporting by Mohi Narayan in New Delhi and Sudarshan Varadhan in Singapore)