By Aaron Sheldrick and Rebekah Kebede
TOKYO/PERTH (Reuters) - Brent crude dipped toward $104 per barrel on Monday as weak data from top energy consumer China muddied the outlook for oil demand, overshadowing the optimism stemming from a pickup in U.S. hiring last month.
Oil prices had risen in early trade on the U.S. jobs data that showed a slight improvement, indicating that while the economy of the world's top oil consumer was healthier, it was also still in need of the Federal Reserve's monetary support.
"Oil prices are rising too much and then the reality sets in that the overall, worldwide demand is not all that great," Tony Nunan, oil risk manager with Mitsubishi Corp in Tokyo. "I think now we're going to swing back and focus on China."
Data over the weekend showed that China's economy is losing momentum, with May exports and domestic activity struggling to pick up.
Brent oil dropped 44 cents to $104.12 a barrel by 0818 GMT, after climbing to $104.76 earlier. U.S. oil dropped 37 cents to $95.66 per barrel.
The market is looking well supplied later in the year, said Victor Shum, managing director, downstream energy consulting, at IHS in Singapore.
"There is broad market recognition that oil supply is racing ahead of demand with strong non-OPEC supply growth," Shum said, adding that Brent will probably trade below $100 on average in the second half.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, has little room to pump more due to a U.S. oil boom that has sparked competition for market share in Asia and set off a rivalry between the OPEC's top two producers Saudi Arabia and Iraq.
But oil price losses may be limited by the stronger U.S. job number and hopes the U.S. Federal Reserve would hold off on tapering its massive stimulus.
The U.S. employers stepped up hiring by a little more than expected in May, but the jobless rate remained well above pre-recession levels and May marked the third straight month that payrolls rose by less than 200,000.
The report showed an economy still in need of the Fed's monetary support, but one which could be strong enough by September for the U.S. central bank to ease up on its bond-buying stimulus, many economists said.
Prices also drew support from concerns about Sudan cutting oil exports from South Sudan, said IHS' Shum.
Sudan edged back from a day-old order to block all oil exports from South Sudan on Sunday, saying it could reverse its decision if its neighbour stopped backing rebels.
The standoff is a stark reminder of the unpredictability of this small but, for China and other Asian buyers and producers, still significant corner of the crude industry.(Additional reporting by Manash Goswami in Singapore; Editing by Himani Sarkar)
