Oil prices rebound amid falling United States output

The West Texas Intermediate for October delivery moved up 2 US dollars to settle at 46.68 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery increased 1.45 dollars to close at 48.92 dollars a barrel on the London ICE Future Exchange.

For the week ended September 11, the USA crude supplies dropped 2.1 million barrels to 455.9 million barrels.

Crude futures extended gains in choppy trade after the bigger-than-expected drop, but pared gains later.

USA crude stocks fell more than expected last week, while gasoline stocks increased and distillate inventories fell, data from the Energy Information Administration showed on Wednesday.

While USA output has started to ease, many believe it is not enough to soak up a flood of oil coming from elsewhere. That data had helped oil resist the negative impact of a sharp contraction in Chinese manufacturing.

Many analysts say oil prices could be about to recover, but investors remain anxious about China. Despite brash statements by USA producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies.

“Assuming an extra 0.5 million barrels per day in Iranian supply on top of recent Organization of Petroleum Exporting Countries production, combined with some weaker seasonal demand in the first half of 2016…surplus could expand to 2 million barrels in the second quarter of 2016 before shrinking again”, said Tim Evans, an energy analyst at Citi Futures.

Commodities were particularly hard hit, with USA oil prices falling below $40 a barrel last month for the first time since the financial crisis.