Crude oil jumps 2% on hopes for US inventory draw

Oil prices rose about two percent on Tuesday as expectations that US crude inventories dropped in the latest week boosted prices after the previous day's slide.

Oil got an early boost as US equity markets rose on strong consumer confidence data in the world's No. 1 economy. As Wall Street retraced much of those gains, oil prices remained up. Industry group American Petroleum Institute will issue a weekly report on US inventories after Tuesday's market settlement at 4:30 pm EDT (2030 GMT).

A preliminary Reuters poll on Monday said US crude stockpiles likely fell 500,000 barrels last week, a third straight week of drawdowns.

Genscape, a market intelligence firm, has also alluded to lower stockpiles, suggesting a draw of about 1 million barrels last week at the Cushing, Oklahoma delivery point for US crude inventories.

On Wednesday, the US government's Energy Information Administration (EIA) will issue official weekly inventory data.

"Until a slew of fundamental guidance is presented tomorrow from the EIA, oil appears poised to track US equities for another session," said Jim Ritterbusch of Ritterbusch & Associates, an oil market advisory in North Wabash, Chicago.

Oil prices could be more volatile than usual until Wednesday, the close of September and third-quarter trading. Brent, the global oil benchmark, was up $1, or 2.1 percent, at $48.34 a barrel by 12:20 pm EDT (1620 GMT). US crude was up 90 cents, or two per cent, at $45.33. Brent and US crude prices fell about three per cent on Monday.

Some traders said the rebound was supported by the International Energy Agency (IEA)'s denial that its chief, Fatih Birol, had told an Austrian newspaper he expected crude to stay at around $45 "for a long time".

The IEA is a global energy watchdog.

Oil has had more than a year of dramatic falls and occasional rallies, with Brent swinging from $115 in June 2014 to under $42 in August 2015.

Prices of other raw materials, including copper, have been battered too, squeezing income for commodity producers and triggering a sector-wide crisis. Shares in commodity merchants such as Glencore and Noble have been hit hard.

Oil prices appeared to stabilize over the past four weeks, Rhidoy Rashid of London-based consultancy Energy Aspects told the Reuters Global Oil Forum.

"They should find a floor around current levels of $45-$55 in Q4 2015" if they remained steady over the autumn refinery maintenance period, Rashid said.