Oil rebounded in New York on speculation that a government report will show that U.S. crude inventories declined for a fourth week.
West Texas Intermediate futures advanced 1.8 percent after closing at a six-year low Monday. U.S. crude stockpiles fell 820,000 barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Prices slipped earlier as Algeria’s energy minister said OPEC can’t halt the slide on its own and needs producers outside the group to help in reducing supplies.
Futures in both New York and London have traded in a bear market since last month amid signs that the glut will persist. The Organization of Petroleum Exporting Countries could boost output to a record 33 million barrels a day after sanctions on Iranian shipments are removed, Iran’s OPEC representative said.
“We’re looking ahead to the inventory data and contract expiration on Thursday,” Phil Flynn, senior market analyst for Price Futures Group Inc. in Chicago, said by phone. “We’ll probably get another drawdown in supply.”
WTI for September delivery rose 75 cents to close at $42.62 a barrel on the New York Mercantile Exchange. Prices dropped to $41.87 on Monday, the lowest settlement since March 2009. September futures expire Thursday. The more-active October contract climbed 71 cents to $43.12. The volume of all futures traded was 8.9 percent above the 100-day average at 2:57 p.m.
The American Petroleum Institute was said to report U.S. crude supplies fell last week. Stockpiles slipped 2.3 million barrels, according to reports on Twitter.
Brent for October settlement climbed 7 cents to end the session at $48.81 a barrel on the London-based ICE Futures Europe exchange. The European benchmark oil closed at a $5.69 premium to the October WTI contract.
“We’ve held above last week’s low of $41.35, which is somewhat supportive,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. “It looks like this is a dead-cat bounce more than anything. Things remain overwhelming bearish.”
U.S. gasoline stockpiles probably dropped in the week ended Aug. 14 while supplies of distillate fuel, a category including diesel and heating oil, rose, according to the median of 10 analyst responses in a Bloomberg survey.
“We’re seeing some book squaring ahead of tomorrow’s inventory data and the expiration of the September WTI contract on Thursday,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone.
The global market faces a surplus of about 3 million barrels a day, Iran’s state-run Islamic Republic News Agency reported Aug. 16, citing the nation’s OPEC representative Mehdi Asali. A supply cut by the 12-member group alone can’t guarantee a return to oil market stability, Algeria’s Salah Khebri said at an event in Algiers, according to Liberte newspaper.
Earlier this month Khebri suggested an OPEC emergency meeting to address the price decline, an idea that drew supportive comments from Libya and Venezuela. Saudi Arabia, the organization’s biggest member, gave no public response on the matter. OPEC raised output by 100,700 barrels a day to 31.5 million in July, the most in three years, the group said in its monthly market report, citing external sources.
U.S. Senate Foreign Relations Committee Chairman Bob Corker said he opposes the nuclear agreement with Iran, arguing it won’t end the country’s enrichment program.
If lawmakers pass a resolution of disapproval -- the likely outcome in the Republican-led House and Senate -- President Barack Obama has said he will veto it. The White House is counting on having enough Democrats in support of the Iran deal to sustain a veto, which would stand unless two-thirds of Congress votes to override it.
“The primary factor remains excess supply and now you have to add growing fears about demand falling,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. “Now that we’ve dropped to 2009 levels it’s become more difficult to make dramatic moves lower. The market still has to find its bottom.”