SINGAPORE – Benchmark Brent crude oil prices inched up just above a key support level of $50 on Wednesday, recovering from multi-month lows, as investors await U.S. oil inventories data to gauge supply.
Oil markets paused for a breather after prices tumbled about 20 percent in July because of a supply glut.
OPEC continued to pump at record rates in July and U.S. shale oil production showed no sign of abating as drillers added more rigs in past two weeks.
A landmark nuclear deal struck between Tehran and world powers has sparked concerns of more Iranian oil returning to global markets and worries about fuel demand growth has also dragged down oil prices.
“The market is still digesting news of Iran coming back with more supply,” Ben Le Brun, a markets analyst at OptionsXpress in Sydney said.
“There is uncertainty in terms of demand growth being able to pick up the slack caused by a supply glut.”
September Brent crude <LCOc1> rose 20 cents to $50.19 a barrel by 0147 GMT (9:47 p.m. EDT) after gaining 1 percent in the previous session, up from a six-month low on Monday.
U.S. crude for September delivery <CLc1> gained 20 cents to $45.94 a barrel, recovering from a four-month low touched on Monday.
U.S. crude inventories fell by 2.4 million barrels last week to 459.7 million, the American Petroleum Institute said late on Tuesday, compared with analysts’ expectations for a decrease of 1.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 504,000 barrels, API said.
The U.S. Energy Information Administration (EIA) will publish its figures on Wednesday at 10:30 a.m. EDT.
A stronger dollar may limit gains in oil prices as it deters holders of other currencies to buy the dollar-denominated commodity. The greenback strengthened against the yen and euro early on Wednesday after Atlanta Federal Reserve President Dennis Lockhart expressed his support for an interest rate hike in September.
On technical charts, Brent may test resistance at $51.03 per barrel, a break above which could lead to a gain to the next resistance at $52.30, Reuters market analyst Wang Tao said.
West Texas Intermediate (WTI) may break resistance at $46.03 per barrel and rise further toward $47.41, he said.
(Reporting by Florence Tan; Editing by Richard Pullin)
This article was written by Florence Tan from Reuters and was legally licensed through the NewsCred publisher network.