The U.S. crude-oil benchmark gave up a modest gain to settle at a seven-month low Monday, as worries about U.S. output growth persisted.

On the New York Mercantile Exchange, light, sweet crude for delivery in July US:CLN7 fell 54 cents, or 1.2%, to close at $44.20 a barrel, its lowest close since Nov. 14. August Brent crude UK:LCOQ7 on London’s ICE Futures exchange, the global benchmark, declined 46 cents, or 1%, to end at $46.91 a barrel.

“The relentless increase in the U.S. oil-rig count continued for a 22nd week with Baker Hughes data showing that another six oil rigs were added in the week to last Friday,” wrote analysts at JBC Energy, in a Monday note. “But the count also indicates a leveling off growth in key areas over the past four weeks including the Permian, Eagle Ford and Oklahoma.”

Overabundance of oil has suppressed prices for nearly three years. Even though major producers in the Organization of the Petroleum Exporting Countries and Russia have sidelined a portion of their output since January, the market remains well-oversaturated and oil storage around the world is in surplus.

The oil market was also faced a potential strong flow of crude from Nigeria and Libya hitting the market soon. Libya recently announced that it would unblock 160,000 barrels a day of production, which has been halted for nearly two years due to a dispute with a German energy company. That could propel Libya’s daily production to 1 million barrels by the end of July, the national oil company said.

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Helima Croft, the head of commodities strategy at RBC Capital Markets, however, questioned the sustainability of recent production gains in Libya and Nigeria, saying those countries remain highly susceptible to insurgent uprisings as internal strife intensify. She also said that when weighing the potential of parties to the output-cut deal holding up their ends of the bargain, smaller producers—and likely cheaters—such as Venezuela don’t have the resources to boost output near-term due to a lack of fresh capital.

“What you have now is a huge divergence between the fundamentals and sentiment,” she said.

The OPEC-led deal is keeping 1.8 million barrels a day off the market, but fading faith in the agreement’s effectiveness has sent prices down 17% this year, reversing the gains seen when the deal was initially reached in late 2016.

The bearish view is likely to remain the dominant sentiment in the short term. Recent options contracts show traders are hedging for the potential of oil falling below $41 a barrel in the months ahead, said Chris Kettenmann, chief energy strategist at New York-based Macro Risk Advisors.

“It’s a race to the bottom,” he noted, adding that investors may be “betting on further downside.”

But at current levels, some say a floor may soon be found. Questions about U.S. shale’s “ability to keep profitable are being asked,” said Stuart Ive, a client manager at OM Financial.

Meanwhile, natural-gas futures tumbled, with the July contract US:NGN17 dropping 14.3 cents, or 4.7%, to close at $2.894 per million British thermal units. Six- to 10-day weather forecasts that have shifted to cooler conditions for the eastern two-thirds of the U.S. followed by mostly normal conditions in early July provided some pressure, wrote analysts at Tradition, in a Monday note.

But risks of hot weather and elevated air-conditioning loads this summer, storage levels that remain more than 10% below year-ago levels, and expectations for increased coal-to-gas switching by utilities are still likely to provide support in coming weeks, they said.

Nymex reformulated gasoline blendstock for July US:RBN7 lost 0.42 cent, or 0.3%, to $14506 a gallon, while August heating oil US:HOQ7 declined 1.59 cents, or 1.1%, to $1.411 a gallon.

— Gunjan Banerji and Jenny W. Hsu contributed to this article