The United States and China, the world's two largest oil consumers, are set to relaunch trade talks this week, although a year after the dispute began there are few signs their differences have narrowed.

Brent crude, the global benchmark, fell 21 cents to $63.90 a barrel by 0818 GMT. U.S. West Texas Intermediate crude  was down 26 cents to $57.40.

"Demand is soft," said Olivier Jakob, analyst at Petromatrix. "Generally, market participants find the market is fairly well balanced and don't seem to be too concerned about any potential supply disruptions."

In a sign that global trade tensions are taking a toll on corporate investment, figures on Monday showed Japan's core machinery orders fell by the most in eight months. The country is the world's fourth-largest user of crude.

"The weaker global economic outlook is keeping oil prices under downward pressure, but tensions in the Middle East are enhancing awareness to possible supply risk and should keep a floor under oil in the medium term," said Stephen Innes, managing partner at Vanguard Markets in Bangkok.

While demand concerns have weighed on the market, Brent has still risen almost 20 percent in 2019 supported by a supply-cut pact led by the Organization of the Petroleum Exporting Countries, and Middle East tensions.

OPEC and its allies last week agreed to extend their supply-cutting deal until March 2020.

Rising tensions between Iran and the United States have brought the two countries close to conflict. Last month, President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone.

Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year.

Oil could also gain support from reports expected to show a drop in U.S. crude inventories.

U.S. crude stockpiles are forecast to fall 3.6 million barrels in a fourth consecutive weekly decline. The first of this week's two supply reports is due at 2030 GMT from the American Petroleum Institute, an industry group.