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Brent crude is still up more than 60 percent from a 12-year low
near $27 in January, but the rally has petered out on signs that
the supply glut will persist and as economic jitters raised
concern about the strength of oil demand.
Global benchmark Brent <LCOc1> was trading at $44.44 a barrel at
1007 GMT, down 28 cents. It fell to $44.28 intraday, the lowest
since May 10. U.S. crude <CLc1> was down 43 cents at $42.70,
having fallen to its lowest since April earlier.
"Right now, there is not much to be optimistic about," said
Olivier Jakob, oil analyst at Petromatrix, citing weak refining
margins that will probably weigh on crude demand. "We have to
wait a little bit longer for the rebalancing."
Britain's BP <BP.L>, the first oil major to report
second-quarter results, on Tuesday reported lower-than-expected
profit and said its refining margins were the weakest for a
second quarter in six years.
Record crude output from the Organization of the Petroleum
Exporting Countries, a glut of refined products and signs of
more drilling activity in the United States in the face of low
oil prices have added to concern about excess supply.
U.S. drillers added oil rigs for a fourth consecutive week. The
decline in U.S. output has been key to balancing a market
weighed by excess supply for two years.
BP Chief Executive Bob Dudley was upbeat on the oil price
outlook, saying the market would start to recover towards the
end of the year and into 2017, although excess inventories would
take longer to get rid of.
"We do see the market coming into balance, it may already be
there," he told Reuters. "There's a lot of stocks. It will take
some time to work its way off, 18 months or so."
Also dampening sentiment, many traders are reducing their bets
on rising prices.
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.
U.S. inventory reports from industry group the American
Petroleum Institute and the U.S. Department of Energy due this
week are expected by analysts to show a fall in crude stocks but
a rise in gasoline supplies. [EIA/S]
The first of these reports, from the API, is due at 4:30 p.m.
EDT (2030 GMT).
(Additional reporting by Henning Gloystein and Karolin Schaps;
Editing by Alexandra Hudson)
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