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Oil up after 4-day loss

Getty

Getty

Oil turned higher on Tuesday, recovering from near six-month lows, as bets for a drop in U.S. crude stockpiles offset worries about a global supply glut and equity market meltdown in China.

The market also saw short-covering after a four-day selloff that wiped between 6 and 7 percent off crude futures, traders said.

Some remained convinced, however, that oil had more to lose, and that a bottom for the market was still far off.

Related: Global oil majors delay $200 billion in projects due to supply glut

“We’re getting a bounce of sorts but I’ll be selling into any strength I see,” said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Holllow, New York.

Brent was up 9 cents to $53.56 by 12:47 p.m. (1647 GMT), after hitting $52.28, the lowest since early February, on earlier concerns about the stock market plunge in China.


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U.S. crude reversed losses to trade up 71 cents at $48.10 a barrel. It rose more than $1 at the session high after touching its lowest since March at $47.68.

The rebound was partly aided by expectations that U.S. crude inventories had fallen last week, after rising to a five-year seasonal average in the prior week, according to government data from last week. That report sparked a selloff in oil.

BMDBannerNewStockpiles in the week to July 24 were expected to have fallen 300,000 barrels, a Reuters poll showed on Monday.

The American Petroleum Institute, an industry group, will release its own inventory report at 4:30 p.m. (2030 GMT) on Tuesday before official government data on Wednesday.

Related: World Bank projects future crude oil price averages

U.S. crude futures hit a 2015 high above $62 just three months ago. Technical analysts think the market could lose another $15, falling below the lows of the 2007-2009 financial crisis, due to a combination of poor fundamentals and weak charts.

“Essentially, we see prices staying lower for longer, but that is a function of crude supply response, primarily from the U.S., which remarkably has not shown any signs of slowing at the moment,” said Virendra Chauhan, an analyst at consultancy Energy Aspects, in a discussion in the Reuters Global Oil Forum.

Chauhan also said he expected Brent prices to dip below $50, bringing them to January lows.

www.cnbc.com


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