Oil rose on Tuesday, snapping a five-day decline, as expanding US corporate earnings and industrial production eased worries about the economy and a weaker dollar made commodities cheaper for holders of other currencies. US crude for September delivery rose 53 cents to settle at $75.77 a barrel, after hitting a one-month low of $74.86 during Monday trade.
-- Brent trades at widest premium to WTI since June Europe's Brent crude futures, whose new contract is for October delivery, rose more sharply, gaining $1.30 a barrel to settle at $76.93. Brent traded at its widest premium to West Texas Intermediate since mid-June, as crude stocks near 20-year highs in the United States tempered investor appetite for near-term US crude.
"Crude futures have rebounded strongly today, following a rally on Wall Street after a string of losses," said Mark Waggoner, president of Excel Futures in Bend, Oregon. October Brent traded on Tuesday at a premium of up to 88 cents a barrel to October US crude, its steepest advantage since mid-June. US crude stocks are near 20-year highs, while combined commercial crude and oil product stocks are at their highest level since 1990, according to government data.
Adding to Brent's relative strength are crude inventories at Cushing, Oklahoma, WTI's main delivery point, at near record highs. They stood at 37.7 million barrels in the week through August 6, just shy of a record 37.9 million barrels in mid-May, according to the Energy Information Administration (EIA). A perceived glut at the NYMEX delivery point can depress near-term WTI prices, which rose less sharply on Tuesday than US oil futures for later delivery.
A Reuters analyst poll ahead of weekly US petroleum inventory reports showed gasoline stockpiles were likely little changed from last week, when they stood close to an all-time high. US gasoline demand normally peaks in the summer driving season, draining inventories. But stocks this summer have risen. Gasoline stockpiles may have declined by 100,000 barrels last week, a Reuters survey showed, while distillate fuels including diesel were expected to have gained 1.5 million barrels.
Crude inventories probably fell 1 million barrels, according to the poll. The American Petroleum Institute will publish industry statistics late on Tuesday, followed by EIA data on Wednesday. Goldman Sachs, in a weekly commodities research report, told clients it is likely that global oil demand has recently been outstripping supply by 600,000 barrels a day on a seasonally adjusted basis.
The US bank pointed to a 40 million to 45 million barrel drawdown in oil stocks kept on tankers at sea over June and July, which it said far outweighed a rise in global onshore stocks, estimated by the International Energy Agency to have risen by around 21 million barrels.