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Oil down over 2 percent; more doubt producer output freeze

A driver refuels his car at a gas station in Milan November 8, 2011. REUTERS/Alessandro Garofalo/Files

A driver refuels his car at a gas station in Milan

A driver refuels his car at a gas station in Milan November 8, 2011. REUTERS/Alessandro Garofalo/Files

By Barani Krishnan

NEW YORK (Reuters) - Oil prices fell more than 2 percent on Monday, with Brent touching one-month lows, as investors doubted that producing countries will freeze output to rein in a worldwide glut.

U.S. crude futures got only brief support from an outage on a pipeline that helps deliver oil to the U.S. storage hub. Traders worried instead that U.S. crude stockpiles probably hit record highs for an eighth straight week. [EIA/S]

Oil prices remain up about 40 percent from around 12-year lows struck in mid-February, although the rally has fizzled on growing scepticism about a proposed output freeze by major producers.

"It appears that the speculative longs that were enticed towards the buyside of the energy complex through most of the first quarter by the upcoming production freeze meeting are now heading for the exits," said Jim Ritterbusch at Chicago-based energy markets consultancy Ritterbusch & Associates.

Brent (LCOc1) settled down 98 cents, or 2.5 percent, at $37.69 a barrel, touching a March 4 low of $37.60. It is down 11 percent from a 2016 high of $42.54 struck on March 18.

U.S. crude (CLc1) finished the session down $1.09, or nearly 3 percent, at $35.70 a barrel, after briefly rebounding on news of an outage on the Keystone pipeline that is among a network delivering oil to the Cushing, Oklahoma storage hub.

U.S. crude has tumbled 15 percent from a 2016 peak of $41.90 on March 22.

The Organization of the Petroleum Exporting Countries and other major oil producers are to meet in Doha, Qatar in two weeks to discuss an output freeze plan. But prospects for a deal look dim, with the Saudis declining to participate without Iran, while Russia reports its highest production in 30 years just weeks before the meeting.

U.S. government data on Friday showed hedge funds cut their net long position in U.S. crude during the week to March 29 for the first time in six weeks. [CFTC/]

Analysts in a Reuters poll forecast that U.S. crude inventories rose 3.3 million barrels last week to an eighth straight week of record highs. (USOILC=ECI)

Adding to the bearish sentiment was data showing U.S gasoline demand down in January from a year earlier, snapping a 14-month streak of year-over-year increases.

Not all investors were bearish on oil.

Jonathan Goldberg, who runs the $550 million oil-focused BBL Commodities Value Fund in New York, said crude was still in the early stage of a bull run, although near-term caution may be necessary with inventories remaining high.

(Additional reporting by Amanda Cooper in LONDON; Editing by Dale Hudson, David Goodman and David Gregorio)