)
Crude oil rebounded from the lowest level in more than six years, as investors cut bets for a US interest-rate increase in September, sending the dollar lower.
West Texas Intermediate (WTI) futures rose as much as 1.3 per cent, as the falling US currency increased the appeal of commodities as a store of value. Slower global economic growth might cause the US Federal Reserve to delay a move, as the minutes released on Wednesday showed officials were concerned about low inflation. Oil has traded in a bear market since July on signs the oversupply will be prolonged and as concern grows that emerging economies will weaken. US crude supplies are almost 100 million barrels above the five-year seasonal average, while some leading members of the Organization of Petroleum Exporting Countries are maintaining near-record production.
WTI for September delivery, which expires on Thursday, rose 23 cents, or 0.6 percent, to nearly $41 a barrel at 11:59 am on the New York Mercantile Exchange. It earlier fell to $40.21, the lowest since March 2009. The volume of all futures traded was 25 per cent above the 100-day average. The more-active October contract increased 21 cents to $41.5. Brent for October settlement declined nine cents to nearly $47 a barrel on the London-based ICE Futures Europe exchange. It reached $46.3, the lowest level since January 14.
The European benchmark crude traded at a $5.59 premium to the October WTI contract.
WTI dropped 4.3 percent Wednesday after U.S. crude supplies expanded by 2.62 million barrels last week, the most since April, according to Energy Information Administration data. Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest U.S. oil-storage hub, rose by 326,000 barrels to 57.4 million through Aug. 14,
A disruption at BP Plc's Whiting plant in Indiana meant about 1.5 million barrels of oil didn't get consumed last week. Inventories at Cushing may expand further as refiners perform seasonal maintenance.
"There's nothing good going on for the oil-market bulls," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. "There will be short rallies as bargain hunters come in, but the market still has lower to go."
'Conceivable Reality'
WTI could slump to lows last seen during the global financial crisis, according to Citigroup analysts including Seth Kleinman. The low reached in December 2008 of $32.40 a barrel "is a conceivable reality," they said in a report Wednesday.
Gasoline prices decreased a sixth day. Supplies of the motor fuel fell 2.71 million barrels to 212.8 million, the least since November, the EIA report showed. U.S. gasoline demand usually drops after the Labor Day holiday in early September that marks the end of the summer driving season.
"We're getting further price weakness in gasoline as the inventory drop is ignored," Evans said. "It looks like attention is focused on the end of the summer driving season."
September gasoline futures decreased 0.81 cent, or 0.5 percent, to $1.5511 a gallon, and earlier touched $1.514, the lowest since Feb. 19.
