Analysts said crude futures could be pressured in coming months by seasonal refinery maintenance and stock builds in key oil products such as distillates, which include diesel.
The commodity’s selloff on Monday comes just a few weeks after it entered the bear market on evidence of a global supply gut and a selloff in equities in China, the world’s biggest energy consumer, amidst weak economic data in the country.
According to the Secretary General of the OPEC Abdallah el-Badri, oil prices are expected to stabilize next year.
US crude hit contract lows, trading about $1 above its bottom for 2015.
Oil prices have fallen to multi-month lows, primarily as a glut of supply have swamped the market, but analysts say prices are likely close to bottom.
West Texas Intermediate (WTI) for September delivery was at US$43.34 (S$60.65) a barrel on the New York Mercantile Exchange, up US$0.26, at 9.10am Sydney time (7.10am Singapore time).
Brent futures were down 31c at $48.87 a barrel, more than a quarter lower from their last peak in May.
On Monday, the gasoline “crack”, or refining margin, hit a one-week high above $26 a barrel.
While drivers, shippers and airlines are enjoying the lower fuel prices spurred by crude’s slump, the oil industry is responding to lower profits with sharp cuts in spending and employment.
Oil surged the most in more than two months in London as Chinese crude imports climbed to a record in July.
That policy may be working, with the latest drop in prices prompting “more Western oil companies to shelve investment plans, which will feed back into slower growth in non-OPEC production“, Capital Economics said. The European benchmark crude traded at a premium of $5.09 to WTI.
“Clearly, the market has interpreted the move as a sign that the health of the Chinese economy is probably worse than even what the official data suggests”, added Razaqzada.
China’s latest decision made dollar-priced commodities expensive and pushed the currency to its lowest against the dollar in nearly three years.
Over and above, Iran has signalled its intent to push up its output and increase global supplies as soon as sanctions are lifted.