Oil edged lower on Monday on a global supply glut pushing fuel storage sites close to capacity, with fewer speculators betting on a rise in crude prices.
Brent, the international benchmark, was down 30 cents at $47.69 a barrel, more than 11% below this month's high. US crude futures traded down 25 cents at $44.35 a barrel, Reuters reported.
"Today, we have a consolidation in the price of oil. From our point of view, the low-to-mid $40s constitutes a decent floor because it's deep into the cost curve of the US shale oil industry," said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas. Investors await the outcome of this week's two-day policy meeting of the US Federal Reserve, just days after China's surprise fourth interest rate cut.
The UAE oil minister said on Monday he expected an upward correction in oil prices next year, as demand is set to recover more quickly than expected.
Suhail bin Mohammed al-Mazroui said OPEC, of which the UAE is a member, had agreed to continue following a market-driven strategy, meaning demand and supply, rather than intervention, would decide price levels.
Many oil market experts remained bearish about the outlook for prices. However, as signals strengthened of a widening supply glut, crude lost more than half of its value since June 2014.
Unwanted diesel and jet fuel cargoes are backing up outside Europe's ports and taking longer, slower routes around the southern tip of Africa to buy time.
Research consultancy Energy Aspects said rising inventories and a mild winter expected for Europe and North America as a result of an El Nino weather event would likely lead to reduced refinery production and lower use of crude by refiners.
Crude stood at around $115 in June 2014, but prices went down to $70 per barrel range last September when overproduction from the US caused prices to dip. Prices continued to sink to $40-50 in early 2015 after OPEC member-states, and in particular the world's biggest crude exporter Saudi Arabia, decided to keep production unchanged in November 2014.
