Global oil prices extended declines Monday, pulling U.S. crude closer to $55 per barrel, after manufacturing activity in China continues to point to contraction in the world's second-largest energy consumer and reports suggest a return to full output capacity in Saudi Arabia. 

China's factory activity improved modestly in September, official data from the National Bureau of Statistics indicated Monday, but the reading sits below the 50 mark that separates growth from contraction in the world's second-largest economy. The reading, coupled with a Reuters report that suggested Saudi Arabia has returned to full output capacity -- some 11.3 million barrels per day -- following drone attacks on the Abqaiq and Khurais facilities earlier this month. 

However, Saudi crown prince Mohammed bin Salman told CBS's 60 Minutes Sunday that global crude supplies would be disrupted, taking prices to "unimaginably high numbers" if strong action isn't taken against Iran, whom he joined the U.S. in blaming for the September 14 attacks.

"Clearly, speculators have taken comfort from Saudi comments and the speed at which they plan to bring supply back to the market," said ING's head of commodity strategy Warren Patterson. "However, we still believe that the market is underpricing the geopolitical risk in the region- just over the weekend Iranian backed Houthi rebels claimed that they had captured a number of Saudi soldiers in an attack."

Brent crude contracts for November delivery, the global benchmark, were seen 85 cents lower from Friday's New York close to trade at $61.06 per barrel while WTI contracts for the same month, which are more tightly linked with U.S. gasoline prices, were marked 59 cents lower at $55.32 per barrel.

OPEC production cuts, which have taking more than 1.2 million barrels per day from the market since late 2017, and are expected to continue into the first quarter of next year, have not only depleted Saudi Arabia's overall stockpiles but also reduced the so-called supply cushion in global crude markets, making them increasingly vulnerable to disruption-lead price surges.

U.S. sanctions on the sale of crude from Iran, whose exports have fallen more by more than 2 million barrels per day since April, as well as similar restrictions on exports from Venezuela, have kept global markets tight for much of the first half of the year.

Mohammed bin Salman said he hoped for a peaceful resolution to the current Gulf conflict, and urged President Donald Trump to meet with Iranian President Hassan Rouhani.