“The term structure of oil continues to weaken and inventories keep piling up. This frames the stage for lower prices in 1Q15,” said Bank of America Merrill Lynch d in a note.
Brent crude was trading $1.07 lower at $59.14 at 9.30 a.m. ET. Benchmark U.S. WTI crude April futures were trading down 90 cents at $49.44 a barrel.
WTI’s March futures settled at $50.34 a barrel on Friday, expiring as the front-month contract.
The largest U.S. refinery strike in 35 years entered its fourth week on Sunday as workers at 12 refineries accounting for one-fifth of national production capacity were walking picket lines.
“Any concerns around refinery strikes in the United States, that would lead to a drop in demand for crude oil at refineries and therefore contribute to higher stocks,” said Gareth Lewis-Davies, oil strategist at BNP Paribas.
U.S. East Coast refineries have also been hit by cold weather, sending up heating oil futures on fears of tight supplies.
The dollar was up 0.43 percent against a basket of currencies, making dollar-tradedcommodities such as oil more expensive for those holding other currencies.
Oil prices more than halved between June and January, with Brent front-month futures reaching a low of $45.19 a barrel on Jan. 13.
Since then prices have picked up. Brent futures jumped to $63 a barrel last week as traders closed longstanding short positions in reaction to a falling U.S. rig count.
Morgan Stanley said that U.S. crude stocks, at record highs, were set to build through May.
“Despite optimism about the large drop in the U.S. rig count in recent weeks, the pace of decline has been decelerating,” it said.
“A further slowing would only reinforce concerns that a large production decline could take longer.”
U.S. drilling has slowed this year as producers react to the collapse in oil prices, but Goldman Sachs also said the pace of the U.S. rig count decline was now slowing.
U.S. oil production growth is expected to reach 440,000 barrels per day by the fourth quarter of 2015 compared with a year before, based on the current rig count, Goldman said in a note. (Reuters)