Oil traded near $40 a barrel before weekly US government stockpile data and after falling into a bear market on concern the global supply glut will persist.
Futures were little changed in New York after dropping below $40 on Monday for the first time since April. While crude and gasoline inventories are forecast to have declined, they will remain at the highest seasonal level in at least two decades. Nigeria has resumed payments to former militants as the government seeks a cease-fire after attacks cut output to the lowest since 1989.
Oil has tumbled more than 20 percent from its peak in June, meeting the common definition of a bear market and ending a recovery that saw prices almost double from a 12-year low in February. The supply glut is upsetting industry expectations, with BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp. reporting second-quarter earnings last week that were worse than estimated.
“Oversupply continues to weigh on the market,” said David Lennox, an analyst at Fat Prophets in Sydney. “We still think the $40 a barrel level is an area where the price will hold because we have seen it bounce off there before.”
West Texas Intermediate for September delivery was at $40.08 a barrel on the New York Mercantile Exchange, up 2 cents, at 1:58 p.m. Hong Kong time. The contract slid $1.54, or 3.7 percent, to $40.06 on Monday, the lowest close since April 18. Total volume traded was about 46 percent below the 100-day average.