US oil settles up 7 cents, at $59.68 a barrel

An oil pump jack in Gonzales, Texas.
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Crude oil futures swung higher on Monday after falling on concerns that U.S. demand for gasoline may fade after a strong stretch and in worries about the potential fallout from the Greek debt crisis.

U.S. crude closed up 7 cents, at $59.68 a barrel, ahead of the expiry of the front-month July contract.

Brent crude for August delivery was up 46 cents at $64.23 a barrel, after falling nearly 2 percent on Friday over worries about a potential Greek debt default.

The contracts spent most of the session in negative territory despite data from market intelligence firm Genscape suggesting a big draw on the week on stockpiles at the Cushing, Oklahoma delivery point for U.S. crude futures.

Gasoline and diesel's proxy, heating oil, fell by 1 percent or more, leading the oil complex lower, as traders and investors cut the products prices from their recent peaks. Gasoline hit near 8-month highs last week.

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"One of the biggest supporters of the U.S. crude rally has been the products markets. But there's concern we may have overproduced gasoline lately, just like how we've been doing with crude," said Matthew Perry at Kronenberg Capital Advisors, an energy-focused hedge fund in Oreland, Pennsylvania.

On the Greek front, euro zone finance ministers welcomed new Athens proposals for a cash-for-reform deal but said it would take more work to avert a default.

Heavy supply & Greece turmoil weigh on oil

U.S. gasoline stocks unexpectedly rose by nearly half a million barrels last week.

Meanwhile, domestic U.S. oil output has remained at around 1970 highs of about 9.6 million barrels a day, weighing on crude prices. This has offset other positive data such as the 2 million barrel draw from Cushing reported on the week by Genscape, market sources said.

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U.S. oil producers added a rig each in the key Permian and Bakken shale basins last week, even as the total number of rigs fell. This fuels worry that the recovery in crude prices in recent months was coaxing drillers to expand activity.

U.S. oil output could decline later this year but will likely pick up in 2016 by 150,000 barrels per day at the current rig count, Goldman Sachs said in a note.

A supply overhang in the Atlantic basin was also pressuring the market, analysts said.

Morgan Stanley said around 10 million barrels of unsold crude, mainly from Nigeria, were floating as offshore storage despite relatively strong summer demand in the northern hemisphere.

"If there are this many challenged cargoes in this strong demand environment, we worry about the outlook for physical oil this fall (autumn) when crude runs and gasoline demand fall seasonally," the note said.