By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude oil futures rebounded Wednesday ahead of a closely watched U.S. inventory report expected to show a decline in reserves.
Crude for September delivery CL1U +2.50% added $1.82, or 2.1%, to $88.50 a barrel on the New York Mercantile Exchange, hovering around session highs. It had earlier traded as low as $86.65 and as high as $88.67 a barrel.
Oil lost ground in the previous session as lackluster quarterly German and Euro-zone growth readings dulled investment demand. Read analysis on Europe’s slowing economy.
Worries about the strength of global economy and prospects for future energy demand has pushed crude prices more than 10% lower over the past month.
“Global manufacturing activity has slowed, which has had a knock-on effect on slowing the pace of growth in diesel demand and overall oil demand,” strategists from Barclays Capital said.
“However, with our economists expecting a rebound in the second-half, the soft patch witnessed in the oil data should start to improve, the first indications of which have started to arrive in the weekly U.S. statistics over the past few releases,” they added.
Later Wednesday the Energy Information Administration is scheduled to deliver its inventory report for the week ended Aug. 12, which the Barclays Capital strategists said “will be closely watched for further confirmation of this trend.”
On Tuesday the American Petroleum Institute reported an unexpected rise in crude supplies along with a big drop in gasoline inventories for the week.
Analysts polled by Platts forecast a drop of about 500,000 barrels in U.S. commercial crude stocks for the week ended Aug. 12. Gasoline inventories are projected to fall by 2.3 million barrels, while middle distillate stocks will show a buildup of 700,000 barrels, according to Platts.
Meanwhile, investors grappled with news producer prices rose 0.2%, more than analysts had expected, as the decline in energy prices hasn’t yet trickled down to the economy. Read more about PPI
Gasoline futures tracked oil higher, with the September contract RB1U +2.35% up 6 cents, or 2.1%, to $2.91 a gallon.
