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Oil rebounds from 9-month closing low

Wednesday, August 06 09:54:34

Brent crude oil rose towards $105 a barrel on Wednesday, bouncing from its lowest close in nine months after industry data showed a large drop in U.S. crude stocks last week.

Investors have become increasingly nervous about weak seasonal demand and poor refinery margins in a global market that is well supplied with high quality, light crude oil.

Brent crude oil was up 17 cents to $104.78 a barrel by 0845 GMT, after settling on Tuesday at its lowest since Nov. 7.

U.S. crude for September delivery rose 16 cents to $97.54 a barrel, after falling as low as $97.00 on Tuesday, its weakest since early February.

Oil prices have fallen more than $10 a barrel over the past six weeks. Global supply has been running ahead of demand, creating a glut in the Atlantic Basin and Asia.

But demand in the United States continues to be strong.

Crude inventories in the United States fell by 5.5 million barrels to 363.9 million barrels in the week to Aug. 1, data from industry group American Petroleum Institute showed on Tuesday. Analysts polled by Reuters had expected a decrease of 1.7 million barrels.

U.S. government data from the Energy Information Administration (EIA) is due at 1430 GMT.

Investors will study the EIA figures closely for news of supplies at Cushing, Oklahoma, the delivery hub for U.S. futures. Stocks there have fallen close to minimum operating capacity.

The drop in U.S. inventories came after upbeat U.S. economic data this week that included a spike in service-sector activity to a nine-year peak and a surprisingly large increase in factory orders, possible signs of better oil demand to come.

Bellew said he expected the market to consolidate with Brent between $104.50 and $105.50 a barrel. (Reuters)

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