Crude futures fell on Monday as European markets observed the Easter break while U.S. data showed hedge funds and other big speculators still slow to build long positions after the oil price rebound of the past two months.
U.S. crude's West Texas Intermediate (WTI) futures below $40 a barrel as investment banks such as Barclays and Macquarie warned that market fundamentals were weak enough that prices could possibly return to mid-, or even lower, $30 levels.
"There's just been too much U.S. crude builds lately for the market to ignore," said Tariq Zahir, who's betting WTI for delivery in the near-term will weaken further versus long-term contracts, expanding the market's so-called contango structure.
Brent's front-month fell 18 cents to $40.26 a barrel. Reuters data showed trading in the U.K.-based benchmark amounted to less than 55,000 lots, about a sixth of regular volume, due to the Easter break.
U.S. crude's front-month contract settled down 0.2 percent, or 7 cents, at $39.39 a barrel.