Crude dived to two-month lows on Friday after the International Energy Agency, the world’s forecaster, said global commercial stocks had reached three billion barrels.
Mounting expectations the US will raise interest rates for the first time in almost a decade next month also drove the dollar higher on Monday, hurting commodities.
“Record levels of crude oil in storage with no let-up in production are likely to keep prices in a range in the coming weeks,” said Sanjeev Gupta, head of EY’s oil and gas practice for Asia-Pacific.
At around 0300 GMT, US benchmark West Texas Intermediate (WTI) for January delivery was down 84 cents at $41.06 while Brent crude for January was 51 cents lower at $44.15.
World oil prices have more than halved in the past 18 months as global production has outpaced consumption, and the IEA on Friday predicted demand will grow by a sluggish 1.2 million barrels next year.
The strengthening greenback, which got a boost over the weekend from bullish comments from a US Federal Reserve member, further hurt oil prices after three weeks of falls.
A higher greenback tends to dampen demand for dollar-denominated commodities among holders of weaker currencies.
Bernard Aw, market strategist at IG in Singapore, said oil prices are unlikely to stage a comeback any time soon.
“Crude oil appears to find some bottom at current levels, although it will find it difficult to break higher as bears are clearly waiting in the folds to knock it lower each time there is a rally,” he said.
