US West Texas intermediate was at $41.76 per barrel, up 16 cents from July's last close. WTI shed 13% in July.

"Oil prices rose on the day but appear vulnerable to concerns of oversupply," ANZ bank said, with traders pointing to an influx of new orders with the start of August.

Overproduction of crude and a wave of refined products were the main factors weighing on oil.

"Last week's crude build in the US and the return of production in both Canada and Nigeria was a rude awakening that rebalancing (of oil markets) is probably further away than the market thought," Singapore Exchange (SGX) said.

Responding to an expected drop in demand, on Sunday top exporter Saudi Arabia slashed the September price for its light crude for Asian customers by $1.30 a barrel.

This is the largest cut in nearly a year, ahead of an expected fall in demand in October when about 1 million barrels per day of refining capacity in Asia will be shut for maintenance.

Output from Opec in July likely reached its highest in recent history, at 33.41 million bpd from a revised 33.31 million bpd in June.

In Libya, the state oil company said it welcomed the reopening of oil ports following a deal between the UN-backed government and opposing forces, saying it would begin work to restart disrupted exports soon. The country is aiming to boost exports to 900,000 bpd by the end of the year.

In the US, drillers last week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, adding three oil rigs to a total of 374.

Just as oil supplies rise, new economic concerns have emerged.

Japanese manufacturing activity shrank in July and new export orders contracted the fastest in more than 3.5 years, a survey showed on Monday.

In South Korea, July exports fell at the fastest pace in three months, far worse than expectations, contracting 10.2% year-on-year to $41.05 billion.

July crude imports fell 5.8% from a year earlier to 88 million barrels, official data showed on Monday.