* Oversupply fears grow, hedge funds cut bullish oil bets
* U.S. oil rigs rise, add to bearish sentiment
* Asian refiners cut runs, struggle with fuel glut
* Cushing crude drawdown, Wall Street rally ignored
(Adds details on post-settlement trade, in paragraph 7)
By Barani Krishnan
NEW YORK, July 11 (Reuters) - Oil prices fell more than 1
percent on Monday, hitting two-month lows on extended selling
after the market's break below a key technical support level
last week due to oversupply fears.
The market last week slumped nearly 8 percent in its biggest
weekly losses in six months and already hit a two-month low on
Thursday after disappointing drawdowns in U.S. crude and
gasoline inventories pointed towards weak demand. EIA/S
The rising U.S. oil drilling rig count and cuts in bullish
hedge fund bets on crude to four-month lows also added to the
hard fall in prices. RIG/U
"We have shifted to a bearish trading stance and off a
neutral posture that we had maintained for approximately a month
following transition from a bullish view in early June," said
Jim Ritterbusch of Chicago-based oil markets consultancy
Ritterbusch & Associates.
Brent crude futures LCOc1 settled down 51 cents, or 1.1
percent, at $46.25 per barrel. The session low was $45.90, the
lowest since May 11.
U.S. crude's West Texas Intermediate (WTI) futures CLc1
slipped 65 cents, or 1.4 percent, to settle at $44.76 a barrel.
Both benchmarks fell further in post-settlement trade, with
WTI sliding 2 percent to a fresh two-month low of $44.42 on the
back of the thinnest trading volume in five sessions.
"We have suggested the likelihood of a price downdraft in
WTI and Brent to about $37 and $38 areas, respectively,"
Ritterbusch said, adding that the move lower could be volatile,
however, with occasional rallies of $1 to $2 a barrel.
Oil prices were down since trading began in Asia on Monday
as refiners in that region cut back on crude orders due to
worries of an economic slowdown.
The market shrugged off data from market intelligence firm
Genscape, which according to traders reported a drop of 488,625
barrels at the Cushing, Oklahoma delivery hub for U.S. crude
futures during the week to July 8.
A Reuters poll, meanwhile, forecast total U.S. crude stocks
fell 3.3 million barrels during the week to July 8.
"Oil prices could drop more," said Fawad Razaqzada, analyst
at forex.com in London. "In the short-term, the bulls will need
WTI to climb back above $46 and Brent $47, otherwise prices may
head at least towards the support trend."
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GRAPHIC-Overall Singapore oil refinery margins http://tmsnrt.rs/29zWN7o
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