Crude oil in New York rebounded from a four-month low as U.S. stocks advanced, ending their longest losing streak since January.
West Texas Intermediate futures climbed 1.2 percent as better-than-forecast earnings helped send equities higher. Both WTI and Brent crude entered a bear market in the past week amid a global surplus and concern that demand from China will wane.
Oil is heading for a monthly decline on signs the global surplus will persist as the U.S. produces near the fastest rate in three decades and leading OPEC members pump at a record. A government report Wednesday will probably show that U.S. crude supplies rose last week, according to a Bloomberg survey.
“Equities are up and that’s sparking a general rebound,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. “We are still off a great deal and were due for a rebound. This looks pretty weak when you think of how much we’ve dropped.”
WTI for September delivery rose 59 cents to close at $47.98 a barrel on the New York Mercantile Exchange. Earlier, futures touched $46.68, the lowest intraday level since March 24. The U.S. benchmark oil reached a six-year low of $42.03 on March 18.
September WTI was little changed after the American Petroleum Institute was said to report U.S. crude supplies fell last week. Stockpiles slipped 1.9 million barrels, according to ForexLive. The contract traded at $47.70 at 4:40 p.m.
Brent for September settlement declined 17 cents, or 0.3 percent, to end the session at $53.30 a barrel on the London-based ICE Futures Europe exchange. It was the lowest closing price since January, 30. The European benchmark closed at a $5.32 premium to WTI.
The Bloomberg Commodity Index rose after dropping to a 13-year low Monday.
“A big drop like this is always going to entice some bargain hunters,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone. “We’re going to further test the March lows unless we see somebody cut supply, whether it’s the shale patch or OPEC.”
BP Plc and Chevron Corp. fired the opening salvo for a further round of cost cuts by major oil companies grappling with low energy prices. Oil producers are seeking large discounts from contractors and sending some projects back to the drawing board to find cheaper ways to build them after crude prices dropped by half in a year.
Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped crude at a record pace in June, a Bloomberg survey showed. Exports from southern Iraq increased to 3.064 million barrels a day in July and will remain at about the same level for the rest of the month, Thaer Yassin, a spokesman for the state-owned South Oil Co., said Monday. That’s up from 3.02 million barrels a day in June.
U.S. crude stockpiles probably climbed by 850,000 barrels in the week ended July 24, according to median of 10 analysts surveyed by Bloomberg before Wednesday’s Energy Information Administration report. A gain will keep supplies about 100 million barrels above the five-year average.
The EIA will probably report that stockpiles of gasoline and distillate fuel, a category that includes diesel and heating oil, increased last week.
Gasoline futures for August delivery decreased 1.72 cents, 0.9 percent, to $1.8032 a gallon in New York. It was the lowest close since April 9.
Ultra low sulfur diesel for August delivery rose 0.88 cent, or 0.6 percent, to settle at $1.6044. The contract touched $1.5699 Tuesday, the lowest level since July 2009.