Oil reverses decline on equity gains, forecast of supply drop
Crude oil reversed losses in New York as gains in Chinese equity markets added to signs that fuel demand will increase in the world’s largest energy user.
Oil climbed after China’s Shanghai’s Composite Index rose 1.2pc as a jump in industrial profits and the prospects for increased spending and tourism boosted the domestic economic outlook.
A US energy department report today may show oil inventories dropped to a four-month low, falling 1.73 million barrels, according to a Bloomberg News survey.
Crude for September delivery was at $77.63 a barrel, up 12 cents, in electronic trading on the New York Mercantile Exchange at 3:04pm Singapore time.
The contract earlier dropped as much as 62 cents, or 0.8pc, to $76.88.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, surged 58.30, or 2.3pc, to 2,633.66 at the 3pm close, the highest since May 28.
Stocks in Japan, the world’s third-largest oil consumer, rose, sending the Topix index to its biggest gain in almost three weeks.
Commercially held US crude stockpiles probably fell 1.73 million barrels from 353.5 million, based on the median estimate from 16 analysts. Petroleum and distillate supplies are expected to have increased.
Brent crude for September settlement on the London-based ICE Futures Europe were at $76.29, up 16 cents, at 3:09pm Singapore time.
The contract earlier fell as much as 44 cents, or 0.6pc, to $75.69 a barrel. Yesterday, it declined $1.37, or 1.8pc, to settle at $76.13.
US crude inventories rose to 356.3 million barrels in the week ended July 23, the highest in four weeks, according to the American Petroleum Institute report.
Petrol stockpiles climbed 877,000 barrels to 222.3 million, a four-month high. Distillate fuel supplies, including heating oil and diesel gained for the ninth time in 10 weeks, adding 407,000 barrels to 162.3 million, the report showed. That’s the highest since the week to January 15.