Oil price rebounds as U.S. supplies decrease

Oil rebounded as a drop in U.S. gasoline supplies helped crude prices shrug off their biggest decline in a month.

Futures rose about 1.1 percent in New York after the Energy Information Administration said gasoline inventories shrank by 1.58 million barrels last week, about twice that suggested by an industry report Tuesday. That was an encouraging sign for demand that helped counter an underwhelming decline in domestic crude stockpiles.

Prices nonetheless were far from recouping Tuesday’s 4.8 percent fall, when concerns about the global economy overshadowed the decision from OPEC and its allies to extend output cuts. The Organization of Petroleum Exporting Countries and allies including Russia agreed Tuesday to prolong cuts into 2020 as they seek to reduce global stockpiles. But concerns over oil demand proved more decisive for the market following weak manufacturing data from the U.S., China and Europe.

“Clearly, there is no getting away from economic bearishness and cooling demand fundamentals,” Stephen Brennock, an analyst at PVM Oil Associates Ltd., wrote in a report. “This morning, however, has provided a reprieve from the selling frenzy as those searching for a bullish catalyst pin their hopes on another drawdown in U.S. oil inventories.”

West Texas Intermediate crude for August delivery climbed 63 cents to $56.88 a barrel on the New York Mercantile Exchange as of 11:35 a.m. The contract shook off a drop shortly after the EIA data was released with a lessthan-expected decrease for crude stocks.

Brent for September settlement rose $1.04, or 1.7 percent, to $63.44 a barrel on the ICE Futures Europe Exchange after slumping 4.1 percent in the previous session. The spread between contracts for December 2019 and December 2020 narrowed Tuesday to $1.91, compared with $2.44 for the same WTI deliveries. Wednesday, the crude traded at a premium of $6.46 to WTI for the same month.