Oil down; Morgan Stanley, Barclays warn of bearish forces

Mon Apr 25, 2016 3:19pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices fell more than 2 percent on Monday as data pointed to fresh U.S. crude builds, while leading banks in commodities said the two-month long oil market rebound has defied fundamentals.

A Reuters poll forecast a nationwide U.S. crude build of 2.3 million barrels last week, a third straight week of such builds. [EIA/S]

Market intelligence firm Genscape reported that stockpiles at the Cushing, Oklahoma delivery point alone rose by over 1.5 million barrels in the week to April 22, traders said.

Analysts at Morgan Stanley attributed oil's recent gains to macro and commodity funds activity, index- and exchange-traded fund flows and buying from investors fearful of missing out, even as fundamentals remained bearish and looked set to worsen as prices moved higher.

Barclays, in an oil sector report, said it was "not yet convinced that prices will remain here or go even higher".

U.S. crude CLc1 settled down $1.09, or 2.5 percent, at $42.64 a barrel. Last week, it hit a five-month high of $44.49.

Brent LCOc1 closed down 63 cents, or 1.4 percent, at $44.48. It hit a mid-November high of $46.18 last week.

Trading was initially choppy, with prices building on gains over the past three weeks before sliding on the Genscape report. The dollar's .DXY slide after a three-day gain also limited oil's downside in early trade as commodities denominated in the greenback became attractive to users of the euro and other currencies. [FRX/]   Continued...

A worker at an oil field owned by Bashneft, Bashkortostan, Russia, in this January 28, 2015 file photo.      REUTERS/Sergei Karpukhin/Files