Oil held steady after a reported drop in US crude inventories alleviated some of traders' concern that slowing economic growth will diminish demand.
Futures were little changed above $56 a barrel in New York on Wednesday. The American Petroleum Institute reported a 3.45m-barrel decline last week, people familiar with the data said. Nonetheless, with President Donald Trump showing little urgency to resolve trade disputes and calling for a "big" interest-rate cut by the Federal Reserve, concerns about the global economy persist.
Oil slumped about 15% since late April as the trade war between the US and China, the biggest economies, weighed on demand. Tension in the Middle East and efforts by the Organization of Petroleum Exporting Countries and allied producers to curtail output have failed to arrest the slide.
"It's a tight market right now," said Bjarne Schieldrop, the Oslo-based chief commodities analyst at SEB AB. "But the assumption is that the future will be very bleak and bearish."
West Texas Intermediate crude for October delivery added 19 cents, or 0.3%, to $56.32 a barrel on the New York Mercantile Exchange at 10:05 am in London. The September contract settled 13 cents higher at $56.34 when it expired on Tuesday.
Brent for October settlement rose 37 cents, or 0.6%, to $60.40 a barrel on ICE Futures Europe after closing 0.5% higher on Tuesday. The benchmark crude traded at a premium of $4.13 to WTI, compared with an average of about $7 in the past year.
Oil rises after drone attack on Saudi Arabia disrupts Gulf calm
The decline in US stockpiles in the API data is more than double the 1.5m -barrel drop forecast in a Bloomberg survey. Inventories at the storage hub of Cushing, Oklahoma, fell by 2.8m barrels, the API was said to report. That would be the biggest decrease since February 2018 if confirmed by the official Energy Information Administration figures scheduled for release Wednesday.
"The drawback will certainly help support sentiment," said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group in Sydney. "But the market is definitely taking the glass-half-empty type approach to data."
There's a 35% chance the US economy will enter a recession in the next year amid ongoing tensions between the US and China, according to economists surveyed by Bloomberg.