Oil halts slide below $40 as US crude stockpiles seen easing

Bloomberg

Oil halted its slide below $40 a barrel as weekly industry data showed U.S. crude inventories declined, easing a supply glut that’s at the highest seasonal level in at least two decades.
Futures added 0.2 percent in New York after slipping 5 percent the previous two sessions. Inventories slid by 1.34 million barrels and gasoline stockpiles fell, the American Petroleum Institute was said to report. Energy Information Administration data Wednesday is forecast to show crude and motor fuel supplies decreased. Brent oil, the global benchmark, entered a bear market on Tuesday, joining West Texas Intermediate.
Oil has tumbled more than 20 percent from its June peak, meeting the common definition of a bear market and ending a recovery that saw prices almost double from a 12-year low in February. Analysts from Citigroup Inc. to Bank of America Merrill Lynch are confident the slump will be short-lived and investors are paying the smallest premium in two months to protect against a drop in crude from now through the end of the year.
“The decline is not totally unexpected, but the speed and severity of the fall has been a surprise” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “Disruptions tightened the market during the second quarter and the sustainability of those was always going to be relatively short lived. There are still relatively high inventories but the market is approaching a balance.”
WTI for September delivery was 2 cents higher at $39.53 a barrel on the New York Mercantile Exchange at 3:02 p.m. in Hong Kong after advancing as much as 0.9 percent earlier. The contract lost 55 cents to $39.51 on Tuesday, the lowest close since April 7. Total volume traded was about 31 percent below the 100-day average.
Brent for October settlement was 9 cents lower at $41.71 a barrel on the London-based ICE Futures Europe exchange. The contract fell 34 cents, or 0.8 percent, to $41.80 on Tuesday. The global benchmark traded at a premium of $1.46 to WTI for October.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, dropped by 1.3 million barrels last week, the API said Tuesday, according to a person familiar with the figures. Nationwide inventories probably declined by 1.75 million barrels, a Bloomberg survey shows before the EIA report.