Hong Kong - Oil held gains above $44 a barrel before US government data forecast to show crude stockpiles extended declines, trimming a glut.
Futures rose 0.4% in New York after advancing 0.4% on Monday. Stockpiles probably fell by 2.85 million barrels last week, a Bloomberg survey showed before an Energy Information Administration report on Wednesday.
Oil may slip below $40 a barrel unless there are sustained inventory declines and a drop in the rig count, according to Goldman Sachs Group.
Oil is in a bear market amid concern rising global supply will offset curbs by the Organisation of Petroleum Exporting Countries and its partners including Russia. US crude inventories remain more than 100 million barrels above the five-year average.
The nation’s shale output can expand further with prices in the mid-$40s, according to JPMorgan Chase.
"The market is likely to see continuing volatility," said David Lennox, a Sydney-based resource analyst at Fat Prophets. "There is still a glut and there is potential for further weakness.
Investors need to see good seasonal demand from the US, otherwise there will be pressure to the downside."
West Texas Intermediate for August delivery was at $44.58 a barrel on the New York Mercantile Exchange, up 18 cents, at 12:39pm in Hong Kong. Total volume traded was about 31 percent below the 100-day average.
The contract climbed 17 cents to $44.40 on Monday, advancing after a weekly loss.
Brent for September settlement was up 20 cents to $47.08 a barrel on the London-based ICE Futures Europe exchange. Prices rose 17 cents to $46.88 on Monday. The global benchmark crude traded at a premium of $2.30 to September WTI.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, probably slid by 1.4 million barrels last week, according to a forecast compiled by Bloomberg.
Inventories fell to 59.5 million barrels through June 30, the lowest since November, according to the EIA.
Oil-market news:
The Opec-led agreement to cut output is working, Russian Energy Minister Alexander Novak reiterated on state-run Rossiya 24 television. A type of US crude pumped in the Gulf of Mexico is proving to be more attractive in India, the fastest-growing oil market, compared with Middle East staples that are on offer.
Wildfires in British Columbia have forced Canadian lumber mills to shut and were edging closer to a Kinder Morgan oil pipeline.
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