Oil prices fall slightly as oversupply concerns persist

Oil prices edged lower in Asian trading on Monday despite last week's gains as concerns about oversupply sparked by U.S.-Iran nuclear talks lingered, while investors awaited Chinese factory data due later in the day.

Investors were also cautious after global ratings agency Moody's downgraded the U.S. investment grade rating.

As of 21:39 EST, Brent crude futures expiring in June fell 0.2% to $65.27 a barrel, while West Texas Intermediate (WTI) futures also fell 0.2% to $61.83 a barrel.

Both crude futures rose more than 1% last week, driven mainly by news earlier in the week that the United States and China agreed to temporarily reduce the high tariffs they imposed on each other.

However, these gains were largely offset by oversupply concerns sparked by a potential US-Iran nuclear deal and OPEC+ production increases.

Oversupply concerns, Moody's downgrade of US rating weighs on market sentiment

Moody's downgraded the U.S. sovereign credit rating by one level from Aaa to Aa1 on Friday, no longer maintaining its highest rating.

The agency cited concerns about the nation’s ballooning $3.6 trillion debt as the reason for the downgrade, a problem that could worsen under President Trump’s proposed tax cuts.

That has led to a cautious mood among oil traders, who are already grappling with developments that could increase supply.

Trump said last week that the United States was close to a nuclear deal with Iran and that Tehran had "sort of" agreed to the terms.

The signing of the agreement and the lifting of sanctions may lead to a large amount of Iranian oil returning to the market, potentially loosening the balance of global crude oil supply and demand.

In addition, the International Energy Agency (IEA) said on Thursday that global oil supply will grow faster this year than previously expected as OPEC+ members gradually withdraw production cuts.

The agency also estimated that global oil demand growth will slow for the rest of the year.

Markets await Chinese industrial production and retail sales data

Markets cautiously awaited China's April industrial production and retail sales data due later on Monday.

Investors will be looking for signs of economic recovery in the world's largest oil importer as China grapples with weak growth and tariff tensions with the United States.

Although Washington and Beijing have announced a 90-day pause on high tariffs, concerns remain around further negotiations.