Oil prices dipped on Tuesday, with U.S. crude hitting three-month lows, as oversupply concerns weighed on the petroleum complex ahead of data likely to show unseasonably high gasoline stocks despite the peak U.S. summer driving period.
Oil prices are still up more than 60 percent from 12-year lows of around $27 a barrel hit by Brent and about $26 struck by U.S. crude in the first quarter. But the rally has faded since the two benchmarks breached $50 in May, amid worries oil may be headed again for a glut like that which forced prices off from highs above $100 in mid-2014.
"Our shift to a bearish stance that was initiated more than three weeks ago is currently being fortified by fresh lows across the energy spectrum that are reflecting a major speculative exit off of the long side," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
"We still see a gradual and orderly price decline going forward well into next month, with WTI values falling at an average weekly pace of around $1.25 a barrel."
Hedge funds and other money managers cut their net long position - bets on rising prices - in Brent and U.S. crude futures and options by 31 million barrels to 453 million in the week ending on July 19. (http://tmsnrt.rs/2aFhYTn)
WTI was down 12 cents, 0.3 percent, at $44.60 a barrel by 11:24 a.m. EDT (1524 GMT). It fell to $42.36 earlier, its lowest since April 20.
Brent fell 27 cents, or 0.6 percent, to $44.45. Its session low was $44.14, the lowest since May 10.
Gasoline was slightly higher at $1.3358 a gallon. The refining margin, or profit, for turning crude into gasoline <1RBc1-CLc1> also perked slightly, to $13.30 a barrel.
U.S. inventory reports for last week from industry group the American Petroleum Institute and the U.S. Department of Energy are expected by analysts to show a fall in crude stocks but a rise in gasoline supplies.
The first of these reports, from the API, is due at 4:30 p.m. EDT (2030 GMT).
Britain's BP, the first oil major to report second-quarter results, announced lower-than-expected profit and said its refining margins were the weakest for a second quarter in six years. Chief Executive Officer Bob Dudley said it may take 18 months or so to work off the market's stock overhang. (By Barani Krishnan; Additional reporting by Alex Lawler and Karolin Schaps in LONDON; Editing by Marguerita Choy)