NEW YORK (BLOOMBERG) - Oil ended higher after a choppy session as concerns over tightening supply outweighed fears over the state of China's economy.
Futures in New York closed 0.4 per cent higher, posting the first gain in nearly a week. Worries over supply constraints in the United States Gulf of Mexico have trumped worsening financial troubles at China's Evergrande Group, which could spill into the rest of the property sector and threaten the country's economy.
Meanwhile, the industry funded-American Petroleum Institute (API) reported that US crude stockpiles fell 6.11 million barrels last week. That would be a seventh straight weekly decrease if government data on Wednesday confirms it. "There are supply issues all around the market," said Again Capital partner John Kilduff.
Oil has resumed its advance over the past month, in part due to a tightening of the market following lingering supply disruptions from US storms. At the same time, consumption is coming into focus in anticipation that soaring natural gas prices will force a shift towards oil.
Meanwhile, the lifting of US travel restrictions could add as much as 200,000 barrels a day of jet fuel demand, according to Energy Aspects.
Some of the volatility in Tuesday's trading session may have stemmed from traders adjusting positions ahead of the expiration of Nymex October crude futures. As the Organisation of Petroleum Exporting countries continues to lift output, two key members said the group should carry on ramping up supply as planned.
The alliance, led by Saudi Arabia and Russia, will meet on Oct 4 to review the next monthly increment of 400,000 barrels a day.
The API also reported a 432,000-barrel-drop in US gasoline supplies and a decline of 2.72 million barrels in distillate supplies. The Energy Information Administration will release its inventory report on Wednesday.