BCS Barclays PLC

Oil prices gave up ground on Monday, dragged lower by a more bearish supply and demand outlook.

The global benchmark, Brent, fell 0.5% to $45.45 a barrel. Its U.S. counterpart, West Texas Intermediate, shed 0.35% to $44.04 a barrel.

A buildup in oil products stockpiles has helped drag prices below $45 a barrel. Demand from the traditional centers in Asia is waning, as domestic production in China increases.

"Market sentiment is gloomy," according to Germany-based Commerzbank. "Financial investors are continuing to retreat from the oil market and in so doing are generating increased selling pressure."

Global oil demand for the third quarter of this year is 66% lower than it was in the third quarter of 2015, according to London-based Barclays bank. Slower economic growth has been the major contributor.

On the supply side, active oil rigs in the U.S. are climbing, spurring market concerns over the resilience of shale oil. On Friday, industry group Baker Hughes Inc. reported that the U.S. oil rig count climbed by 14 to 371, marking a fourth straight weekly increase.

Over the weekend, Iran began drawing on its floating storage crude reserves of around 35 million barrels, indicating that supply in the country is beginning to draw down. Gasoline consumption hit monthly highs in July, increasing the demand for crude in Iranian refineries.

But elsewhere, the picture is more bearish. U.S. gasoline stocks grew 900,000 barrels last week while China's exports of gasoline in June surged to a historical high.

"[The growth in distillate] was to be expected as many refiners were producing in a full swing while we are coming to the end of the driving season," said Avtar Sandhu, Asian commodities analysts at Phillip Futures, who suggests prices could test support at around the $41 level.

Investors this week will be keeping a close eye on two major central banks—the Bank of Japan and the U.S. Federal Reserve—for their decisions on interest rates and outlooks on their respective countries.

The U.S. Federal Open Market Committee will meet on July 26 to 27, followed by the Bank of Japan's policy meeting on July 28 and 29.

Kevin Baxter contributed to this article.

Write to Miriam Malek at Miriam.Malek@wsj.com and Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

July 25, 2016 06:45 ET (10:45 GMT)

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