World oil prices dropped on Monday as investors fretted over the strength of worldwide energy demand following weak Chinese economic data.

New York's main contract, West Texas Intermediate crude for delivery in April, shed $1.06 to $106.34 a barrel.

Brent North Sea crude for April was down 65 cents at $125.33 in late afternoon deals.

"Crude oil fell sharply... Traders were reacting to news over the weekend that China had recorded its largest trade deficit in more than ten years," said GFT analyst David Morrison.

"This added to concerns over the outlook for global growth as austerity measures across Europe take hold."

Concerns over China's energy demand were stoked after customs data released Saturday showed the economy swung to a trade deficit of $31.48 billion in February.

The deficit -- which is the largest for at least 12 years -- comes as demand continues to falter in China's key US and European export markets.

The data follow figures on Friday which showed that China's inflation rate slowed sharply in February and factory output growth also slipped.

China's weak figures outweighed bullish data showing that its monthly crude oil imports reached a record monthly high in February and US figures showing a further surge in jobs growth in the world's leading economy, analysts said.

It imported 23.64 million tonnes of crude oil last month, equivalent to 5.98 million barrels a day.

China is the world's biggest energy consumer, while the United States is the largest consumer of crude oil.

Morrison added: "However, while Chinese exports fell, the country continues to import record amounts of crude oil.

"This suggests that China is acting strategically to boost its energy holdings, no doubt mindful of growing geopolitical risks, and anxious to ensure that it will be able to keep abreast of future domestic demand."

Oil prices also sank on Monday as investors opted to cash in their recent gains and took their cue from the firmer dollar, which makes raw materials such as oil more expensive for buyers holding weaker currencies.

"It looks like the week started on the negative side, as crude oil prices retreated," added Sucden oil analyst Myrto Sokou on Monday.

"It seems that investors remain cautious about the level of the oil demand. "Investors were prompted to some profit taking today, following the strong upside rally in crude oil prices last week."

The market advanced last week by an upbeat US non-farm payrolls report and after Greece clinched a vital debt-swap deal with private creditors to avert bankruptcy.

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