Oil rebounds from biggest slump in four weeks on inventory drop

New York/London: Oil rebounded from the biggest daily loss in four weeks as industry data showed US crude and gasoline stockpiles declined.

Futures climbed 1.7% in New York following Wednesday’s 4.1% loss.

Crude and gasoline inventories both dropped by more than by 5.5 million barrels last week, the American Petroleum Institute (API) was said to report. Government data on Thursday is also forecast to show supplies declined.

Oil remains in a bear market amid concerns that rising supply from Libya to the US will counter production cuts from the Organization of Petroleum Exporting Countries (Opec) 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 (Energy Information Administration) will be followed closely for confirmation or deviation.”

West Texas Intermediate (WTI) for August delivery advanced 78 cents to $45.91 a barrel at 9:56am on the New York Mercantile Exchange. Total volume traded was about 6% below 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 71 cents, or 1.5%, to $48.50 a barrel on the London-based ICE Futures Europe exchange, after sliding 3.7% on Wednesday. The global benchmark crude traded at a premium of $2.43 to September WTI.

US crude stockpiles dropped by 5.8 million barrels last week, while gasoline inventories fell by 5.7 million barrels, the API said, according to people familiar with the data.

An EIA report slated to be released later in the day on Thursday is forecast to show nationwide crude inventories shrank by 2 million barrels and gasoline supplies fell by 1.8 million barrels, according to a Bloomberg survey.

US crude production fell to 9.25 million barrels a day in the week ended 23 June, according to the EIA.

“If we see a pullback in production, that really may get the market going,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.