Oil prices turned lower Monday, failing to hold on to earlier gains as the stubborn glut of oil in storage continued to weigh on the market.
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U.S. crude futures settled down 54 cents, or 1.21%, at $44.20 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 46 cents, or 0.97%, to $46.91 a barrel on ICE Futures Europe.
Oil prices were pulled down by falling prices for gasoline and diesel, as well as pressure ahead of Tuesday's expiration of the July futures contract, said Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk.
Some traders are looking ahead to data scheduled for release Wednesday on the amount of oil and fuel in U.S. storage tanks. Those figures have disappointed investors for weeks, showing that stockpiles in the U.S. have remained high despite production cuts by the Organization of the Petroleum Exporting Countries and other major producers.
"There's reason to believe the report will again lean to the bearish column," Mr. Morton said.
Even though major OPEC producers and Russia have cut output since January, fading faith in their agreement's effectiveness has sent prices down more than 17% this year, reversing the gains seen when they initially agreed to reduce output in late 2016.
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"The decline in oil inventories has been modest this year. As a result, investors have curbed their oil exposure in the futures market," Giovanni Staunovo, an energy analyst at UBS, wrote in a note Monday.
U.S. producers have ramped up more quickly than most were anticipating, undermining some of OPEC's efforts. U.S. data Friday showed the U.S. oil rig count increased for a 22nd consecutive week, with operators adding another six oil rigs last week.
Market participants were also concerned about the expected increase in Libyan and Nigerian oil output. Recent data suggest the two countries could add up to 250,000 barrels a day to OPEC's June output level, according to PVM Oil.
The bearish view is likely to remain the dominant sentiment in the short term. Recent options contracts show traders are hedging for the potential of oil falling below $41 a barrel in the months ahead, said Chris Kettenmann, chief energy strategist at New York-based Macro Risk Advisors.
"It's a race to the bottom," he noted, adding that investors may be "betting on further downside."
Virendra Chauhan, an oil analyst at consultancy Energy Aspects, agreed. "Nothing fundamentally is going to push oil prices higher in the near term," he said.
And with bearish sentiment taking over, some are wary of calling the bottom too soon.
"It should stop here, but I don't think it's going to. I think we're going to start seeing it slide," said Mark Waggoner, president of Excel Futures.
Gasoline futures fell 0.42 cent a gallon, or 0.29%, to $1.4506. Diesel futures fell 1.59 cents, or 1.11%, to $1.4111 a gallon.
Jenny W. Hsu contributed to this article
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(END) Dow Jones Newswires
June 19, 2017 16:03 ET (20:03 GMT)