Investing.com - West Texas Intermediate oil futures rallied sharply on Tuesday, as market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
Crude oil for delivery in December on the New York Mercantile Exchange jumped 96 cents, or 2.08%, to trade at $47.10 a barrel during U.S. morning hours. It earlier rose to $47.28, the highest since October 19.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.7 million barrels in the week ended October 30.
According to industry research group Baker Hughes (N:BHI), the number of rigs drilling for oil in the U.S. decreased by 16 last week to 578, the ninth straight weekly decline and the lowest level since June 2010.
Over the prior nine weeks, drillers in the U.S. have cut 97 rigs. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
However, U.S. oil production has held around 9.0 million barrels a day, close to the highest level since the early 1970's. Meanwhile, total U.S. crude oil inventories stood near levels not seen for this time of year in at least the last 80 years.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for December delivery tacked on 93 cents, or 1.9%, to trade at $49.72 a barrel.
A day earlier, Brent prices lost 77 cents, or 1.55%, after a pair of disappointing manufacturing reports added to worries about future demand from China.
The Asian nation is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.
The oil market has been volatile in recent months amid uncertainty about how quickly the global glut of crude is set to shrink. Despite this tighter outlook for North America, output remains robust in other countries such as Saudi Arabia and Russia.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $2.62 a barrel, compared to $2.65 by close of trade on Monday.