Crude futures briefly came off their lows after market intelligence firm Genscape reported a drawdown of about 1.8 million barrels last week at the Cushing, Oklahoma delivery point for U.S. crude, traders who saw the data said.
If confirmed, the numbers from Genscape would be the largest since the actual drawdown of 1.87 million barrels at Cushing in the week to June 19, official data from the U.S. Energy Information Administration showed.
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Financial markets are also waiting to see whether the U.S. Federal Reserve will raise interest rates this week for the first time in nearly a decade. Should rates rise, analysts expect oil to fall, as a stronger dollar would undermine demand from importing countries.
Earlier on Monday, oil fell after growth in China's investment and factory output missed forecasts in August. A recent run of weak data from the world's second-largest economy has raised the chances that third-quarter growth may dip below 7 percent for the first time since the financial crisis.
Oil prices have dropped almost 60 percent since June 2014 on the largest global surplus of crude in modern times amid concerns about a slowing Chinese economy.
"We think we are near the floor, but nothing precludes that we temporarily move lower," BNP Paribas global head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum on Monday.
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Several banks said the immediate outlook remained weak, with Goldman Sachs and Commerzbank cutting their oil price forecasts last week.
North Dakota's daily oil production fell less than 1 percent in July, state regulators said on Monday, a drop far less than many feared and one showing the state's Bakken shale formation could continue pumping high volumes of crude for the foreseeable future despite sliding prices.
Advances in technology and efficiencies have helped the productivity of each drilling rig roughly double in the past year, helping the industry do more with less.
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Highlighting that gain, the number of producing wells in North Dakota hit 12,940 in July, an all-time high.