US oil settles down 62 cents, or 1.39%, at $43.98 a barrel

Oil jack pumps in the Kern River oil field in Bakersfield, California.
Jonathan Alcorn | Reuters

Crude prices edged lower on Monday, staying under pressure after two straight weeks of losses, on worries that the oversupply in oil products could swell from unseasonably warm weather and the waning maintenance cycle for U.S. refineries.

Influential Wall Street trading house Goldman Sachs warned of downside risk for oil prices through spring 2016 as U.S. and European storage utilization for distillates, which include diesel, neared historic highs.

Traders told Reuters that as refined oil product storage tanks fill up, unwanted diesel and jet fuel cargoes were backing up outside Europe's ports and taking longer, slower routes around the southern tip of Africa.

"There's talk in the market about ULSD (ultra low sulfur diesel) storage potentially reaching 'tank tops', and that's weighing on crude," said Dave Thompson of Washington-based broker Powerhouse.

Crude headed lower: Traders

Brent, the global benchmark for crude, was down 45 cents, or 0.94 percent, at $47.53 a barrel by 2:35 p.m. EDT. U.S. crude futures fell 62 cents, or 1.39 percent, to $43.98 a barrel, its lowest settlement since Aug. 10.

ULSD futures in the U.S. and gas oil in London were also down about 1 percent.

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Both crude benchmarks have lost about 10 percent over the past two weeks combined.

Goldman it would take 50 fewer heating degree days (HDDs) than normal in Europe for storage there to hit tank tops.

HDDs are measured by the difference between the average temperature outside and the 70 degrees Fahrenheit (21 degrees Celsius) level, which is deemed to be neutral indoors for heating. The lower the reading, the less energy products such as heating oil and natural gas are expected to be required for heating.

"While our distillate balances suggest that stocks will fall short of capacity, the margins of error are small and the risks high, leaving risks to current crude oil prices and timespreads as skewed to the downside through next spring," analysts at Goldman Sachs wrote.

Investments in oil are likely to decline further in 2016 after sliding this year by more than a fifth, Fatih Birol, executive director of the International Energy Agency (IEA), said.

"If it comes true, this will be the first time in two decades we will see oil investments declining for two consecutive years and may be an indication for future oil markets," Birol said at Singapore International Energy Week.