Crude prices were seen bouncing back from its biggest fall in 11 months on Wednesday ahead of the US inventories report which could show a strength of fuel demand in the US, the world’s largest oil consumer.
Futures for the North American West Texas Intermediate (WTI) for November delivery traded 0.43% higher to $91.56 per barrel on the New York Mercantile Exchange, after falling 4% in the previous session, the lowest since May 2013.
Meanwhile, the European benchmark Brent crude for November settlement rose 0.11% to $95.00 per barrel on the ICE Futures exchange based in London.
Tuesday’s fall in crude prices were due to the strengthened US dollar which continues to grow stronger. The US dollar index gained 0.11% to 86.0310.
According to reports, Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, reduced its output in August by the most in 20 months as production will be maintained at a reduced level through the end of the year.
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Meanwhile a survey released by Reuters on Tuesday, showed that the oil supply from the from the Organization of the Petroleum Exporting Countries (OPEC) climbed to its highest level since November 2012, boosted by the higher production from Saudi Arabia, Libya and other gulf producing countries.
The Paris-based International Energy Agency is expecting an additional 600,000 barrels a day of global demand through December, while Canada is expected to be the first among non-member producers to cut its output if crude falls below $80 a barrel, according to Antoine Halff, the head of the IEA’s oil industry.
Oil traders will be focusing on the release of the US crude inventories report from the US Energy Information Administration due later in the day. Analysts are expecting the report to show that crude inventories in the US climbed to 359.5 million in the week ending September 26. Gasoline inventories are forecasted to have dropped by 600,000 barrels to 209.7 million barrels.
In other news, China’s manufacturing activity for September remained unchanged from August, with the world’s second-largest economy’s Purchasing Managers Index standing at 51.1 points, according the National Bureau of Statistics and China Federation of Logistics.
Projections from the IEA based in Paris showed that China is expected to account for 11% of global demand this year, while the US is forecasted to account for 21%.
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