NEW YORK (Reuters) - Oil prices settled down more than 1 percent on Monday after rising stockpiles of crude and refined fuel intensified fears another major glut was building up.
Market intelligence firm Genscape reported that the Cushing, Oklahoma delivery hub for U.S. crude futures saw a supply build of 26,460 barrels in the week to July 15, traders who saw the data said.
Morgan Stanley said it still expected a supply-demand rebalancing in oil by mid-2017 but added that fundamental headwinds were growing in the market. “Tail risks are admittedly large in both directions, as geopolitics add to uncertainty.”
An attempted coup in Turkey barely supported the market as Istanbul’s Bosphorus Strait, which handles about 3 percent of global oil shipments mainly from Black Sea ports and the Caspian region, reopened from a brief closure.
Prices came off session lows after a labor union said a 24-hour strike on July 26 by Wood Group (WG.L) oil and gas maintenance workers employed at Royal Dutch Shell’s (RDSa.L) platforms in the North Sea will severely disrupt operations.
Brent crude LCOc1 settled down 65 cents, or 1.4 percent, at $46.96 a barrel. It fell more than $1 earlier to an intraday low of $46.50.
U.S. West Texas Intermediate (WTI) crude CLc1 settled down 71 cents, or 1.6 percent, at $45.24 a barrel, after a session low at $44.86.
“We are maintaining a bearish trading stance as we still see an ultimate price downdraft in WTI and Brent to about $37 and $38 areas respectively,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
A Reuters poll projecting a ninth straight weekly drop in U.S. crude stockpiles did not support prices. Nor did U.S. government data showing shale crude output likely fell for a 10th straight month in August.
The world’s refineries have churned out more diesel, gasoline and jet fuel than eager drivers and holiday makers have been able to consume even over the summer travel season, cargo loadings and U.S. government data showed.
Oil prices are up nearly 75 percent since hitting 12-year lows of around $27 for Brent and about $26 for WTI in the first quarter. The rally has stalled since the two benchmarks breached the $50 a barrel mark in May as worries grew that higher prices will fuel more production.
Hedge funds last week cut their bullish bets on Brent to the lowest since February even they raised their positive wagers on U.S. crude, data showed.
Additional reporting by Ahmad Ghaddar in LONDON; Editing by Marguerita Choy and Andrew Hay