Oil Rebounds From Biggest Slump in Four Weeks on Stockpile Drop

(Bloomberg) 

Oil rebounded from the biggest daily loss in four weeks as industry data showed U.S. crude and gasoline stockpiles declined.

Futures climbed as much as 1.7 percent in New York, paring Wednesday’s 4.1 percent loss. Crude and gasoline inventories both dropped by more than by 5.5 million barrels last week, the American Petroleum Institute was said to report. Government data Thursday is also forecast to show supplies fell.

Oil remains in a bear market amid concerns that rising supply from Libya to the U.S. will counter production cuts from the Organization of Petroleum Exporting Countries and its partners including Russia. American crude stockpiles are more than 100 million barrels above the five-year average.

“The bullish news is the weekly oil stocks data from the API,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “Now the weekly oil inventory report from the EIA will be followed closely for confirmation or deviation.”

West Texas Intermediate for August delivery advanced as much as 77 cents to $45.90 a barrel on the New York Mercantile Exchange, and was at $45.70 as of 10:40 a.m. London time. Total volume traded was about 21 percent above the 100-day average. The contract lost $1.94 to close at $45.13 on Wednesday, snapping the longest run of gains this year.

Brent for September settlement climbed as much as 78 cents, or 1.6 percent, to $48.57 a barrel on the London-based ICE Futures Europe exchange, after dropping 3.7 percent on Wednesday. The global benchmark crude traded at a premium of $2.44 to September WTI.

U.S. crude stockpiles dropped by 5.8 million barrels last week, the API said, according to people familiar with the data. An Energy Information Administration report Thursday is forecast to show inventories shrank by 2 million barrels, according to a Bloomberg survey.

Oil-market news:

The market has worsened and prices may be stuck near $50 or below, according to Astenbeck Capital Management LLC’s Andy Hall. U.S. shale drilling is expanding “at a surprisingly fast rate, thus raising the odds for significant oversupply in 2018,” Hall wrote in a July 3 letter to investors. U.S. strategic crude stockpiles have dropped to the lowest level in more than 12 years as the shale boom reduces the nation’s need for an emergency buffer against shortages. Saudi Arabia  cut August pricing for most of its crude grades to Asia as the world’s largest oil exporter seeks to stay competitive.