Investing.com - West Texas Intermediate oil futures held near the lowest level in more than six years on Wednesday, as market participants 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 October on the New York Mercantile Exchange inched up 8 cents, or 0.22%, to trade at $39.39 a barrel during European morning hours. New York-traded oil futures tumbled to $37.75 on Monday, a level not seen since February 2009.
Wednesday's government report was expected to show that U.S. crude oil stockpiles rose by 1.1 million barrels last week, while gasoline stockpiles were forecast to decline by 1.4 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 7.3 million barrels in the week ended August 21, compared to expectations for an increase of 1.9 million.
Nymex oil futures have been under heavy selling pressure in recent months as worries over high domestic U.S. oil production weighed.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by two last week to 674, the fifth straight weekly gain. The rig count dropped for 29 straight weeks before rebounding modestly in recent weeks.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery shed 11 cents, or 0.24%, to trade at $43.10 a barrel. London-traded Brent futures sank to $42.23 on Monday, the lowest level since March 2009.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
The spread between the Brent and the WTI crude contracts stood at $3.71 a barrel, compared to $3.90 by close of trade on Tuesday.
Meanwhile, Chinese equities struggled on Wednesday, as worries about whether China’s central bank had done enough to spur its slowing economy remained on investors' minds.
After a rollercoaster session swinging in and out of the red, the Shanghai Composite closed down 1.3%, reflecting investors' views that much more support was needed from the government and the central bank.
The People's Bank of China cut interest rates and lowered the reserve requirement ratio for large lenders on Tuesday, in a much-anticipated move that some in the market believed was long overdue.
Recent steep declines in Chinese equity markets have sparked fears that they will hasten an economic downturn and undermined investor confidence in the government’s ability to revitalize economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears over the condition of the economy.
In Europe, Germany's DAX dropped almost 2% on Wednesday, while France’s CAC 40 and London's FTSE 100 were both down around 1.5%, as investors resumed their focus on the deteriorating outlook for China and its impact on the global economy.
Meanwhile, U.S. stock futures gained 1%, signaling that Wall Street will open stronger later in the day, as markets attempt to recover from sharp losses the previous session.
In a sign of how unconvinced investors were of China's latest easing move, a sharp rally on Wall Street evaporated on Tuesday and turned into deep losses.
The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.