Oil climbs from multi-month lows on China stock market gains

Tue Aug 4, 2015 5:13pm EDT
 
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By Barani Krishnan

NEW YORK (Reuters) - Global crude prices rose from multi-month lows on Tuesday, helped by a stock market rally in No. 2 oil consumer China, but abundant supply and a weak demand outlook make crude's rebound unlikely to hold, traders and analysts said.

Brent, the world benchmark for oil, and U.S. crude settled up for the first time in four sessions, a day after Monday's 5 percent rout triggered by weak factory activity in China.

While the recovery was aided by an overnight rise in Chinese equities - and the short-covering normal after a selloff in oil - the widening gulf between demand for crude and projected supply could negate any rally, traders said.

The U.S. Energy Information Administration, the Paris-based International Energy Agency and the Organization of the Petroleum Exporting Countries will give their monthly updates next week on barrels per day (bpd) of oil needed by the market versus that in storage or under production.

In July, OPEC's output reached the highest monthly level in recent history, a Reuters survey found.

Offsetting at least some of that bearish sentiment, the American Petroleum Institute reported that U.S. crude inventories fell by 2.4 million barrels last week, more than the 1.5 million barrels forecast by analysts in a Reuters survey. [EIA/S]

The report, coming after Tuesday's market close and ahead of official inventory data on Wednesday, helped Brent and U.S. crude futures extend gains slightly in post-settlement trade.

Brent LCOc1 settled up 47 cents, or 1 percent, at $49.99 a barrel. It hit a six-month low on Monday, coming within cents of its 2015 bottom of $49.19.   Continued...

 
A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014.  REUTERS/Eric Gaillard