Oil declined after the biggest two-day increase in more than a month as prices fluctuated following a fall into a bear market this week.
Futures dropped as much as 1.2 percent in New York after rising 6.1 percent the previous two sessions, rebounding from the lowest closing price since April. Baker Hughes Inc. reports drill rig data Friday, which will signal if U.S. producers are continuing to boost activity. Government figures Wednesday showed gasoline inventories fell, while crude stockpiles unexpectedly rose. Both are at the highest seasonal level in at least two decades.
Oil is fluctuating after tumbling more than 20 percent into a bear market and closing below $40 a barrel on Tuesday for the first time in almost four months. Citigroup Inc. and Bank of America Merrill Lynch predicted the slump would be short-lived, while Societe Generale SA said the price correction would be limited due to a better balance between supply and demand.
“One of the things that triggered the price retreat is the consistent gains in rig count we’ve had, so we’ll want to look at what’s happening with rigs in today’s data,” Michael Hsueh, strategist at Deutsche Bank AG in London, said by e-mail. “If the rig count addition goes above five per week and stays there, that rings an alarm bell for the production outlook in 2017.”
West Texas Intermediate for September delivery lost as much as 49 cents to $41.44 a barrel on the New York Mercantile Exchange and was at $41.68 at 9:09 a.m. London time. The contract rose $1.10 to close at $41.93 on Thursday, capping the biggest two-day gain since June 29. Prices are up 0.2 percent this week. Total volume traded was about 22 percent below the 100-day average.
Brent for October settlement slid as much as 54 cents, or 1.2 percent, to $43.75 a barrel on the London-based ICE Futures Europe exchange. The contract on Thursday added $1.19 to $44.29. Front-month prices are up 3.7 percent this week. The global benchmark traded at a premium of $1.55 to WTI for October.
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U.S. gasoline stockpiles slid by 3.26 million barrels to 238.2 million, according to the Energy Information Administration. Nationwide oil inventories gained, rising to 522.5 million barrels and keeping supplies more than 100 million barrels above the five-year average. Companies increased drilling for a fifth week through July 29, according to Baker Hughes data.
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