By Amanda Cooper
LONDON (Reuters) - Oil prices fell on Monday, erasing some of last week's 2 percent gain, after data rekindled concern about China's economy, outweighing an increase in U.S. investors' crude holdings.
Heavy oversupply and concern about growth in demand in emerging markets and elsewhere have sent the oil price skidding 50 percent over the last year and kept it below $50 a barrel for most of the past nine weeks.
Data showing that profits earned by industrial companies in China, the world's largest commodities consumer, declined at their fastest rate in four years in August has created fresh concern about manufacturing activity reports due later this week.
"Oil prices are continuing to fluctuate as they did last week. After rising on Friday, prices are largely shedding their gains again today. Brent has dropped to $48 per barrel and WTI to $45 per barrel. Once again, weak economic data from China are generating headwind," Commerzbank said in a note.
Brent crude futures were down 92 cents at $47.68 a barrel at 1355 GMT, while U.S. crude futures were down 90 cents at $44.80 a barrel.
More From This Section
The crude price is set for an 11 percent fall in September, its 11th monthly decline out of the last 15 months.
"We've been discussing the possibility that oil needs to move down to $30, but I think that is only if you run out of storage capacity and given that (there is) still quite substantial storage capacity, in my view you still have flexibility," said Bjarne Schieldrop, chief commodity analyst at SEB.
"Increasing stocks will increase the need for a higher contango," he said, adding: "If you look on the forward curve, buyers are increasingly (present) at the front end of the curve after having been burned heavily by ... longer-dated contracts."
The contango, or premium, at which longer-dated contracts trade above prompt Brent futures hit its highest since the start of the year earlier this month at $8 a barrel, but has since contracted to below $7.
Investors increased their bullish bets on crude oil in the week to Sept. 22 and now hold the largest net long position since early August, according to data from the Intercontinental Exchange.
Monday's price falls came despite an ongoing reduction in U.S. drilling, which has been on the decline for four straight weeks, a sign continued weak prices were causing oil and gas producers to reduce drilling plans.
(Editing by Susan Fenton)