NEW YORK - Oil futures fell about 1 percent on Monday amid global oversupply worries, but losses were muted as investors eyed potential sanctions on Iran from the European Union, a possible production cut from OPEC and slightly bullish storage drawdown in U.S. crude stocks.
Brent crude was down 70 cents a barrel at $66.06 at 11:37 a.m. EST (1637 GMT), having recovered from a session low at $65.27. U.S. crude futures traded 15 cents lower at $56.31 a barrel.
EU foreign ministers endorsed a French government decision to sanction Iranian nationals accused of a bomb plot in France, potentially allowing the measures to take effect across the bloc, three diplomats said.
Potential sanctions from the E.U. would come as the United States has granted waivers to some of Iran's oil customers, muting the policy's expected impact on global supplies.
The Organization of the Petroleum Exporting Countries, led by Saudi Arabia, is pushing for the group and its partners to reduce output by 1 million to 1.4 million barrels per day to prevent a build-up of unused fuel.
Russian Energy Minister Alexander Novak said that Russia, which is not an OPEC member, planned to sign a partnership agreement with the group, and that details would be discussed at OPEC's Dec. 6 meeting in Vienna.
"For a cut to be successful in supporting the market, they're going to have to present a front that is not fractured and the chance of that is looking less and less likely as Dec. 6 approaches," said Bob Yawger, director of energy futures at Mizuho in New York.
While a large cut would be supportive of crude futures, clear signals from producers are needed to lift prices notably, Yawger said. "We lack any certainty other than that the market is oversupplied in the U.S. and everybody else is trying to deal with it."
U.S. crude stockpiles have grown for eight straight weeks, and data last week showed inventories swelled by the most in more than a year, weighing on the market.
Traders said futures pared losses on bullish stockpile data Monday as they said that energy information provider Genscape reported that crude inventories fell in the week ended Friday.
Brent is almost 25 percent below early October's 2018 peak of $86.74, as evidence of slowing demand has materialised and output from the United States, Russia and Saudi Arabia hit historic highs.
"Oil prices rose (last week) on hope OPEC and partners, will act to reverse bearish sentiment, but from a technical set up, bear mode remains intact," OANDA strategist Stephen Innes said.
A trade dispute between the United States and China is one reason investors are a lot warier about the outlook for oil demand growth next year.
Fund managers cut their bullish exposure to crude futures and options to the lowest since around mid-2017 this month.
Weekly exchange data shows money managers hold a combined net long position equivalent to around 364 million barrels of U.S. and Brent crude futures and options, down from over 800 million barrels two months ago.
"The main trend remains bearish as investors no longer believe in a risk of supply tightness for crude," ActivTrades chief analyst Carlo Alberto De Casa said.