U. S. crude futures dropped again on Monday, weighed by further anxiety over oil demand amid high levels of domestic refined product inventories. Nymex natural gas futures, shrugging off record high inventories and soft cash prices in the face of mild weather forecasts, rallied sharply midday Monday, as concerns about stricter position limit enforcement prompted some shorts to cover.

IN FOCUS: A preliminary poll ahead of weekly petroleum inventory reports showed forecasts for a 2.7-million-barrel drawdown in domestic crude stocks, a 1.5-million-barrel increase in distillate supplies and an 800,000-barrel build in gasoline stocks.

Enbridge Inc has restarted a segment of its Canada-to-United States crude oil pipeline system shut by a power outage last week, a spokeswoman said Monday. The cause of the outage remains under investigation after restart of the segment that was shut, a 125-mile (200-km) stretch of Line 4 between Edmonton and Hardisty, Alberta, the spokeswoman said.

Crude oil freight rates on major routes were mixed on Monday with weak demand and growing vessel availability continuing to take its toll on ship owner earnings. The world's benchmark Very Large Crude Carrier (VLCC) export route from the Middle East Gulf to Japan was barely changed at W30.31 from W30.77 last week.

Some 80,000 tonnes of Indonesian crude oil will be loaded on Sept. 28, for a rare shipment to Hawaii or the U. S. West Coast, due to ample supply in Asia Pacific and falling prices, traders said on Monday.

FUNDAMENTAL OUTLOOK: We see an upside in crude oil. The weakness in the dollar and an upside in equities is expected to lend support to crude.