Oil rebounds from biggest slump in four weeks on easing supplies

Hong Kong - Oil rebounded from the biggest daily loss in four weeks as industry data showed US crude and gasoline stockpiles declined.

Futures climbed as much as 1.4% in New York, paring on 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 was said to report.

Government data on Thursday is also forecast to show supplies fell.

The market has "materially worsened" and prices may be stuck near $50 a barrel or below, according to Astenbeck Capital Management’s Andy Hall.

Oil remains in a bear market amid concerns that rising supply from Libya to the US will counter production cuts from the Organisation of Petroleum Exporting Countries (Opec) and its partners including Russia.

American crude stockpiles are more than 100 million barrels above the five-year average.

"Gasoline demand has increased because of the US driving season and that’s a good sign for the market," said Barnabas Gan, an economist at Oversea-Chinese Banking in Singapore.

"The rally is still extremely fragile and any signs which point to a higher supply environment into the second half could be a factor for oil prices to fall further."

West Texas Intermediate for August delivery added as much as 65 cents to $45.78 a barrel on the New York Mercantile Exchange, and was at $45.44 at 1:01pm in Hong Kong. Total volume traded was about 1% 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 gained as much as 54 cents to $48.33 a barrel on the London-based ICE Futures Europe exchange. Prices slid $1.82 to $47.79 on Wednesday. The global benchmark traded at a premium of $2.46 to September WTI.

US crude stockpiles dropped by 5.8 million barrels last week, the API said, according to people familiar with the data. An Energy Information Administration report on Thursday is forecast to show inventories dropped by 2 million barrels, according to a Bloomberg survey.

Oil-market news:

US shale drilling is expanding "at a surprisingly fast rate, thus raising the odds for significant oversupply in 2018, even if Opec maintains its production cuts," Astenbeck’s Hall wrote in a July 3 letter to investors.

US strategic crude stockpiles have dropped to the lowest level in more than 12 years as the shale boom reduces the nation’s need for an emergency buffer against shortages.

Saudi Arabia cut August pricing for most of its crude grades to Asia as the world’s largest oil exporter seeks to stay competitive.