By Timothy Puko and Miriam Malek 

Oil prices gave back a big chunk of last week's gains, with traders losing hope that the world's big producers will cut their output and that Asia's economies can help drive demand.

The market had shot to a three-week high late last week on speculation of increasing economic stimulus, and cooperation on output cuts between Russia and OPEC.

But many leaders of the Organization of the Petroleum Exporting Countries are actively damping expectations for cuts. New data also suggests U.S. output is still resilient and the Chinese manufacturing sector is still contracting. Many of the factors that sent oil on a historic plummet over the past 19 months haven't changed, analysts said on Monday.

"We are now getting a dose of reality," said Scott Shelton, broker at ICAP PLC.

Light, sweet crude for March delivery settled down $2, or 6%, at $31.62 a barrel on the New York Mercantile Exchange. It is the largest daily dollar loss since Jan. 6 and snaps a four-session winning streak. Front-month April Brent crude, the global benchmark, settled down $1.75, or 4.9%, at $34.24 a barrel on ICE Futures Europe.

As early as last week, senior OPEC officials were rebutting claims from Russia about cooperation on output cuts. Iran also said Friday it "won't consider a cut" until its exports have increased by 1.5 million barrels a day over current levels of roughly 1.1 million barrels a day. The International Energy Agency predicts the country will export an extra 300,000 barrels by the end of this year now that international economic sanctions against it have ended.

For oil prices to break higher, these exporters would have to confirm a deal, said Olivier Jakob, an analyst at Switzerland-based Petromatrix.

"We continue to view a coordinated production cut as highly unlikely and ultimately self-defeating," Goldman Sachs analysts said in a note issued late Sunday. "Prices need to remain low enough to force fundamentals to create the adjustment back toward a new equilibrium."

That will likely keep oil between $20 and $40 a barrel until the second half of the year, the analysts said. They expect oil prices to be highly volatile and without a clear trend until then.

Saudi Arabia hasn't wavered from leading a group of OPEC's most powerful members to keep producing at full tilt and defend their market share amid competition from Russia, the U.S. and other non-OPEC producers. Russian production also hit post-Soviet records last year. And U.S. government data from late Friday showed the country's production in November was still up 1.3% from the year before, inching down just 0.6% for the month at 9.3 million barrels a day.

Without cooperation on cutbacks, several of the world's largest oil producers are likely on their way to deeper problems. Nigeria and Azerbaijan have already approached the International Monetary Fund for a bailout, with low prices pummeling their oil-dependent economies.

"At lower prices, we can expect more bottom picking, providing temporary support to prices, but it will be really difficult for a lot of producers to cope at $26 or less," Mr. Jakob said.

Lackluster Chinese manufacturing data was also damping prices. China's statistics bureau reported Monday that the official manufacturing purchasing managers index fell to 49.4 in January from 49.7 in December, marking the lowest level since August 2012 and the sixth straight month of contraction.

China's continuing slowdown has weighed on global oil demand. Last month, China said the country's economy grew 6.9% in 2015, the slowest pace in 25 years.

"This weak data would likely remind the market of bearishness again, suggesting more drops for the market in the week ahead," said Phillip Futures analyst Daniel Ang.

However, some analysts say China's crude imports could grow around 7% this year driven by demand from local refiners and as the government stocks up its strategic reserves. Crude demand from China grew by 8.8% in 2015.

Gasoline futures settled down 4.93 cents, or 4.4%, at $1.083 a gallon. Diesel futures fell 4.22 cents, or 3.9%, to $1.0365 a gallon.

Jenny W. Hsu

contributed to this article.

Write to Timothy Puko at tim.puko@wsj.com and Miriam Malik at miriam.malik@wsj.com

(END) Dow Jones Newswires

February 01, 2016 15:39 ET (20:39 GMT)