By Jenny W. Hsu 
 

Crude oil prices fell in early Monday trade in Asia as the prospect of more oil-digging activities in the U.S. and a growing glut of distillate fuel pessimism that the oil market is tightening at a slower pace than previously expected.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $44.12 a barrel at 0239 GMT, down $0.07 in the Globex electronic session. September Brent crude on London's ICE Futures exchange fell $0.04 to $45.65 a barrel. Oil prices have been under the $50-a-barrel threshold for weeks thanks to multiple bearish factors.

Britain's decision in June to leave the European Union left market players wondering about the possible contagion effects on regional economic health and oil demand.

The steady growth in the number of active oil rigs digging for oil in the U.S. is spurring concerns of more shale output in the future. Moreover, the ballooning glut of distillates, such as gasoline and diesel, around the world is darkening the outlook.

On Friday, industry group Baker Hughes reported that the U.S. oil rig count climbed by 14 to 371, marking a fourth straight weekly increase. The rise was mostly buoyed by the recent price rally as prices went from around $25 a barrel in February to the current level.

"The uptrend in the rig count can be thought as a rebalancing of the rebalancing that may slow the rate of decline in U.S. crude production," said Tim Evans, an energy analyst at Citi Futures.

U.S. gasoline stocks grew 900,000 barrels last week while China's exports of gasoline in June surged to a historical high.

"[The growth in distillate] was to be expected as many refiners were producing in a full swing while we are coming to the end of the driving season," said Avtar Sandhu, Asian commodities analysts at Phillip Futures, who tips prices could test support at around the $41 level.

Multiple supply disruptions around the world are also coming to an end. In Nigeria, police arrested a key militant responsible for attacks on oil infrastructure, according to an AFP report.

In addition to weekly oil inventories data from the U.S. energy department on Wednesday, investors this week will be keeping a close eye on two major central banks -- the Bank of Japan and the U.S. Federal Reserve--for their decisions on interest rates and outlooks on their respective countries.

The U.S. Federal Open Market Committee will meet on July 26 to 27, followed by the Bank of Japan's policy meeting on July 28 to 29.

Nymex reformulated gasoline blendstock for August--the benchmark gasoline contract--fell 29 points to $1.3586 a gallon, while August diesel traded at $1.3603, 33 points higher.

ICE gasoil for August changed hands at $398.75 a metric ton, up $3.50 from Friday's settlement.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

July 24, 2016 23:31 ET (03:31 GMT)

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