Stockpiles of gasoline fell last week, and gasoline futures prices also weakened. Stocks of distillates, including diesel, fell less than expected, though diesel will continue to be affected by an oversupplied global market. That oversupply in diesel and the approaching seasonal decline in summer driving and gasoline use could mean less oil demand from refineries.
"We've fallen from that $58 all the way to $50, and that's a pretty good move," said Michael Wittner, head of commodities research Americas at Societe Generale. "So you have to believe there will be some consolidation for a time."
Wittner said the three big factors—China, Greece and Iran all weighed on prices recently, and now the market was stabilizing.
While the government reported refineries were running at 95.5 percent capacity, summer driving has been peaking and the industry will be requiring less crude oil.
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"We're going to be in for some seasonal weakness. Pricewise, we got that early. We could tread water here for a while," Wittner said. He said he doesn't see a swift decline, and said oil could hover in a range.
Kilduff said crude could trade in a range but ultimately prices should decline. "I think realistically it should likely bounce around in here. But the elements are definitely in place for it to head lower still. They continue to build refined product. That's sort of the next phase of this," he said.
Wittner said it is important that U.S. oil production, while at a 40-year high, has plateaued as opposed to increasing. "That's the big change in the last several months. Gulf of Mexico production is increasing while shale is already declining," he said.
Gulf production should next stabilize and shale would continue to decline if prices stay low. While U.S. oil output could stay steady or start to decline, production elsewhere could continue to increase. Iran's production is expected to come back slowly into next year.
"After this wave of risk aversion on China, Greece and Iran, the big thing since the fourth quarter of last year—it's OPEC production. Saudi Arabia and Iraq have increased production by more than 1.6 million barrels a day," said Wittner. "That's literally double what we think we're going to get out of Iran by 2016. Forget about Iran, this has already happened and it's happening now. ... That's a weight on the global crude and products complex."