Oil saw its worst monthly drop since the 2008 financial crisis after signs that top producers in the Middle East were continuing to pump at record levels despite a growing global gut.
A higher U.S. oil rig count for a second week in a row added to the market's downside. Uncertainty ahead of key U.S. oil production and rig count data due later in the day also weighed on prices, despite a weaker dollar, which would normally support commodities.
U.S. crude closed down $1.40, or 2.89 percent, at $47.12 a barrel. The contract fell nearly 21 percent for the month of July, marking its largest monthly decline since October 2008, when oil had an epic collapse at the outbreak of the financial crisis. Brent fell 18 percent on the month.
Meanwhile, Brent was down $1.10 at $52.21 a barrel.
Diverting some attention from crude, heavy hedging activity in gasoline and diesel futures ahead of front-month contract expiration dominated play on the petroleum complex.