Crude climbed as traders counted on another week of declines in U.S. crude inventories to help ease the glut that’s pushed prices below $40 a barrel.
Futures rose 2.9 percent in New York, paring Monday’s 3.4 percent slide. U.S. crude stockpiles probably fell a second week, according to a Bloomberg survey before government data Wednesday. Prices rebounded despite Saudi Arabia’s planned cuts to 2016 spending that are based on a Brent price next year of $37 a barrel, according to John Sfakianakis, a Riyadh-based economist at Ashmore Group Plc and a former government adviser.
Crude is heading for its second annual decline amid a global supply glut that may deepen as OPEC effectively abandons output limits and Iran plans to raise production once sanctions are lifted. Brent, the benchmark for more than half the world’s oil, is poised to end 2015 with the lowest annual average price in 11 years, hurting energy-exporting countries and companies.
West Texas Intermediate oil for February delivery climbed $1.06 to settle at $37.87 a barrel on the New York Mercantile Exchange. Trading volume was 58 percent below the 100-day average at 2:52 p.m.
Brent for February settlement rose $1.17, or 3.2 percent, to $37.79 a barrel on the London-based ICE Futures Europe exchange. The European benchmark oil closed at an 8-cent discount to WTI. Brent traded lower than WTI last week for the first time in 11 months after the U.S. decided to lift its restrictions on crude exports.