Oil prices rebounded Tuesday after falling steeply in the previous session owing to weak Chinese and US manufacturing and continued worries about the global supply glut, analysts said.
US benchmark West Texas Intermediate (WTI) for September delivery rose 69 cents to $45.86 a barrel compared with Monday’s close.
Brent North Sea crude for September was up 80 cents at $50.32 a barrel in London afternoon deals.
WTI plummeted $1.95 while Brent tumbled $2.69 on Monday, extending sharp losses of more than two percent on Friday.
Analysts said the small rebound was likely to be capped as dealers focused on sluggish manufacturing data from energy guzzlers China and the United States.
A key private economic indicator on the Chinese manufacturing sector, Caixin’s purchasing managers index, showed a plunge in July to a two-year low of 47.8, deeper into contraction territory.
A reading of 50 marks the line between growth and contraction. The official PMI showed a drop to 50.0 in July from 50.2 in June.
In the United States, the Institute for Supply Management’s purchasing managers index showed manufacturing activity cooled to 52.7 in July from 53.5 in June.
“Weakening growth in the global economy piled on the pressure for commodities,” said Bernard Aw, market strategist at IG Markets in Singapore.
“Juxtaposing the waning demand in crude oil with persistent upticks in supply, the overhang seems to be widening,” he added.
Long-running worries about the global supply glut were exacerbated by comments from the Iranian oil minister Bijan Zanganeh on the Islamic republic’s plans to ramp up oil exports once sanctions are lifted, as part of the country’s deal with six major powers to limit its nuclear program.
The price of crude has steadily fallen from around $120 a barrel in June last year, largely due to oversupply caused by the OPEC oil cartel’s refusal to trim lofty output levels and surging US shale production.