October Brent crude LCOV6, -0.05% on London’s ICE Futures exchange rose $1.30, or 3.1%, to $43.10 a barrel.
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Futures gave up earlier gains in Wednesday’s afternoon session as traders waited for official data on United States commercial crude inventories from the Department of Energy (DoE). The two data sets do not always correlate, however, so a drawdown in the API inventory data is no guarantee that EIA data will also indicate a reduction in crude oil inventories.
Oil rose amid speculation that the oversupply still weighing on global markets will diminish, even after prices fell into a bear market on Monday. 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. “Supply’s already contracting and demand’s still okay”. Refinery crude demand jumped 266,000 barrels a day from the prior week. The Genscape report came after US government data on Wednesday showed a 1.1 million-barrel decline at the Cushing hub during the week to July 29.
U.S. West Texas intermediate (WTI) crude plumbed $39.86, its lowest since April 20, before settling at $40.06, down $1.54, or 3.7 percent.
Oil prices have edged down as more-than-expected-output and high volumes of unsold crude across the globe weighed on markets.
Oil prices are expected to remain low through mid-2017, according to a recent forecast by USA financial services company Morgan Stanley. The next inventory report from the EIA will come tomorrow.
Oil hit 2016 highs above $50 a barrel between late May and June as crude supplies tightened from disruptions in Canada, Nigeria and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela.
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This is the sixth consecutive rise of oil rig count and triggered concerns about the chances of an increase in domestic crude oil production amid the supply glut. Since then, traders have become increasingly concerned that demand is not growing fast enough to whittle away near-record inventories of crude oil and petroleum products in the near future.
