Industry data shows that the global oil rig count for new production edged up in June for the first time this year, rising by two to 1,407, largely thanks to an uptick in US drilling.
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Delivery of Crude oil for September on the NYMEX plunged 7 cents or 0.14 percent, to trade at $40.78 a barrel by 07:52GMT, or 3:52AM ET.
United States crude oil fell on Tuesday to end below $40 a barrel for the first time since April as persistent worries of both a crude and refined fuel glut and a slide in U.S. equities offset an early boost from a weak dollar.
Stocks dropped 3.26 million barrels to 238.2 million barrels, according to data from the U.S. Energy Information Administration (EIA).
Further data revealed a 3.262 million barrel plunge in gasoline inventories, compared to the 452,000 barrel build up seen the previous week, and against projections of a 640,000 barrel fall. USA commercial crude oil inventories increased by 1.4 million barrels from the previous week to 522.5 million barrels.
US crude oil inventories were at 522.5 million barrels as of July 29, a historically high level for this time of year, the EIA said. West Texas Intermediate, the US benchmark for the price of oil, was up in parallel to Brent to open at $39.72 per barrel.
The EIA said the 521.1 million barrels in the USA stockpile is more than 61 million barrels higher than it was a year ago and more than 150 million barrels above the supply figure two years ago.
Brent for October settlement rose 89 cents to $43.03 a barrel on the London-based ICE Futures Europe exchange.
USA oil stockpiles have decreased since hitting their April peak, but they remain near 30-year highs, and that continues to pressure prices. The resumption of production in places like Canada, Nigeria and Iran also suggests that millions of new barrels of crude will flood the market. Oil prices have fallen dramatically over the last two years from their highs in mid-2014, when a barrel of oil was trading at US$100. Official figures released last week showed that at the height of the summer driving season, U.S. gasoline stockpiles were at their highest seasonal level in at least two decades.
For the week though, Brent was on track for a gain of about 3 percent while WTI was marginally lower, helped by technical short-covering and bargain-hunting that pushed oil prices up by almost 6 percent over the past two sessions.
Oil rose in NY amid a weaker dollar and speculation the oversupply still weighing on global markets will diminish, even after prices fell into a bear market on Monday.
“But a return to the lows that we saw earlier this year seems unlikely, and there are other reasons to think that prices will begin to rise again before long”.
The Canadian government bonds plunged after global crude oil prices rebounded on Tuesday after falling by 10 percent in one week.
David Lennox, an analyst at Fat Prophets in Sydney, told Bloomberg News the supply glut will continue to weigh on the market.
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Oil companies have postponed or cancelled oil exploration and development projects due to low crude prices, in turn affecting the offshore drilling industry.
