Brent oil rebounds after plunging to 6-month low
Investing.com – Brent oil futures regained strength on Tuesday, as investors returned to the market to seek cheap valuations after prices plunged more than 5% to a six-month low in the previous session.
On the ICE Futures Exchange in London, for September delivery rose 43 cents, or 0.88%, to trade at $49.96 a barrel during European morning hours.
A day earlier, London-traded Brent prices plunged to $49.36, a level not seen since January 27, before ending at $49.52, down $2.69, or 5.15%, as ongoing worries over a global supply glut drove down prices.
Brent futures tumbled $11.39, or 18.6%, last month, amid concerns a resumption of Iranian oil exports will add to a global glut.
Iran and six world powers reached a long-awaited nuclear deal in July that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program. Iran reportedly hoards 30 million barrels of oil in its reserves ready for export.
Reports of record high oil exports from Iraq and robust production from Saudi Arabia also contributed to losses.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Elsewhere, for delivery in September on the New York Mercantile Exchange tacked on 58 cents, or 1.3%, to trade at $45.76 a barrel. On Monday, Nymex oil tumbled to $45.08, the weakest level since March 19, before closing at $45.17, down $1.95, or 4.14%.
U.S. oil futures bounced off the previous day's four-month low, as market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report Tuesday, while Wednesday’s government report could show crude stockpiles fell by 0.4 million barrels in the week ended July 31.
New York-traded oil futures dropped $12.22, or 21.24%, in July, the biggest monthly loss since October 2008, as worries over high domestic U.S. oil production weighed.
Industry research group Baker Hughes (NYSE:) said Friday that the number of rigs drilling for oil in the U.S. increased by five last week to 664, the second straight weekly gain.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.20 a barrel, compared to $4.35 by close of trade on Monday.
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