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.
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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)