Oil trimmed losses that tipped prices into a bear market amid a broader commodity rout as trading volatility advanced to the highest in almost two weeks.
Futures climbed as much as 1 percent in New York after closing on Thursday more than 20 percent below this year’s peak in June, meeting the common definition of a bear market. U.S. crude supplies remain almost 100 million barrels above the five- year average after an unexpected increase through July 17, government data showed Wednesday. A measure of price fluctuations rose Thursday to the highest level since July 10.
Oil’s rebound from a six-year low in March has faltered on signs a global surplus will persist. Prices have been swept up in a broad selloff of raw materials, which have fallen to a 13- year low amid concerns that economic growth will stagnate in China, the biggest consumer of energy, metals and grains.
“The glut story is persisting,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said. “There’s a lot of oil and we should be in a period where we’re seeing declines in stockpiles.”
WTI for September delivery rose as much as 47 cents to $48.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $48.68 at 2:44 p.m. Sydney time. The contract slid 74 cents to $48.45 on Thursday. The volume of all futures traded was about 14 percent below the 100-day average. Prices are heading for a fourth weekly decrease, the longest slump since March.
Brent for September settlement was 14 cents higher at $55.41 a barrel on the London-based ICE Futures Europe exchange. The contract fell 86 cents to $55.27 on Thursday. The European benchmark crude was at a premium of $6.73 to WTI.
US crude stockpiles expanded by 2.47 million barrels to 463.9 million last week, Energy Information Administration data showed, compared with a forecast in a Bloomberg survey for supplies to drop by 2.2 million. The nation is producing near the fastest rate in three decades.
Average prices for fuels such as crude, natural gas and coal this year will tumble 39 percent from 2014, the World Bank said this week in its quarterly commodities outlook. Large oil inventories and rising output from the Organization of Petroleum Exporting Countries suggest prices will remain weak in the medium-term, according to John Baffes, the report’s main author.
A private gauge of Chinese manufacturing fell in July to the lowest in 15 months, compared with estimates for a gain in a Bloomberg survey. The Bloomberg Commodity Index of 22 raw materials extended its decline to a 13-year low on Friday and is set for a third weekly loss.
The Chicago Board Options Exchange Crude Oil Volatility Index closed at 38.46 on Thursday. The gauge of hedging costs on the U.S. Oil Fund, the largest exchange-traded fund tracking WTI futures, is heading for the third weekly gain in four weeks.
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