Investing.com – West Texas Intermediate oil futures reversed losses on Wednesday to trade above the $48-level after data showed that oil supplies in the U.S. fell much more than expected last week.
On the New York Mercantile Exchange, for September delivery hit a session low of $47.40 a barrel before bouncing back to trade at $48.49 during U.S. morning hours, up 51 cents, or 1.06%. Prices were at around $47.74 prior to the release of the inventory data.
The U.S. Energy Information Administration said in its weekly report that U.S. fell by 4.2 million barrels in the week ended July 24.
Market analysts’ expected a crude-stock fall of 0.2 million, while the American Petroleum Institute late Tuesday reported an decline of .
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 212,000 barrels last week, compared to forecasts for an increase of 250,000 and following a gain of 813,000 barrels a week earlier.
Total U.S. crude oil inventories stood at 459.7 million barrels as of last week, remaining near levels not seen for this time of year in at least the last 80 years.
The report also showed that decreased by 0.4 million barrels, while increased by 2.6 million barrels.
On Tuesday, Nymex oil futures slumped to a four-month low of $46.68. New York-traded oil futures slumped 21% in July as ongoing worries over high domestic U.S. oil production weighed.
According to industry research group Baker Hughes (NYSE:), the number of rigs drilling for oil in the U.S. increased by 21 last week to 659, the most since May.
Elsewhere, on the ICE Futures Exchange in London, for September delivery hit an intraday low of $52.53 a barrel, before turning higher to trade at $53.60, up 30 cents, or 0.57%.
A day earlier, London-traded Brent futures fell to $52.28, a level not seen since January 30 as ongoing concerns over a glut in world markets continued to drive down prices.
London-traded Brent futures slumped 18% in July 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 earlier in the month 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.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $5.11 a barrel, compared to $5.32 by close of trade on Tuesday.
In other news, Federal Reserve officials are expected to provide further signals that the central bank could raise rates as soon as September if the economy continues to improve as expected when it releases its rate statement later in the session.