Brent crude was trading at $46.38 per barrel at 0653 GMT (02:53 a.m. EDT), down 38 cents from its last settlement. U.S. West Texas Intermediate (WTI) crude was down 46 cents at $44.95 a barrel.

Physical markets were also under pressure. Rising Canadian oil flows are having difficulty finding space in pipelines, weighing on Canadian prices, now at a $15 discount to WTI.

Iran set the official selling price of its light grade for Asia at $0.45 above the Oman/Dubai average for August, down 40 cents on the month.

Traders said the lower prices were a result of Asian refiners beginning to cut crude orders, and also to the region's economic slowdown.

"Crude imports to Asia over the last few months are falling ... (but) volumes were so high over the last year thanks to the rush to take advantage of the low oil prices, that it was rather natural that we would see a slowdown sooner than later," said Ralph Leszczynski, head of research at ship broker Banchero Costa.

"As we look at 321 cracks around the world, most are now trending near or below 5-year seasonal lows. Economic run cuts are finally starting in a few markets, but more may be needed ... The implied, but delayed, ripple effect into crude demand is not helpful for oil balances and prices," Morgan Stanley said.

Goldman Sachs said that it expected "WTI oil to remain in a range of $45-50 per barrel over the next 12 months".

Meanwhile, there is evidence that U.S. producers can live with crude of $45 or higher, as drillers added rigs for the fifth week in six, U.S. oil bankruptcies became sparse in June, and bullish U.S. oil bets dropped to near four-month lows.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that oil markets were becoming balanced and, as a result, prices were stabilizing.

However, signs of economic slowdown weighed. In Japan, core machinery orders unexpectedly fell 1.4 percent in May from the previous month, down for a second straight month, government data showed on Monday.

Elsewhere, China's economic growth likely cooled to a fresh seven-year low of 6.6 percent in the second quarter, according to a Reuters poll of 61 economists, its weakest in seven years.

Despite this, vehicle sales climbed 14.6 percent to 2.1 million units in June compared with last year, according to the China Association of Automobile Manufacturers.

(reuters.com)