U.S. crude rose on Tuesday as bullish U.S. consumer data overshadowed ample global oil supplies and weak economic data in most countries that are major users.
Oil jumped by about $1 after an industry group reported that U.S. consumer confidence rose in August to its highest level since October 2007 on improved feelings about the current state of the economy, but later trimmed gains after failing to push through a resistance point at $94.35, analysts said. Yet both U.S. and Brent crude pared earlier gains, with Brent moving into negative territory after having risen 75 cents.
Brent crude was off 20 cents near $102 a barrel, after a gain of 36 cents the previous day. U.S. crude, or West Texas Intermediate (WTI), gained 51 cents to settle at $93.86 a barrel, off early highs above $94.
The international benchmark is headed for a second straight monthly decline in August as slow growth in China and Europe has curbed oil demand and led to a supply glut in the Atlantic Basin, offsetting the impact on prices from world political tensions. Investors have unwound a global political risk premium in Brent, discounting the possibility of supply disruption despite conflicts in Iraq, Libya and Ukraine.
On Monday, hedge funds and other big speculators cut their bets on rising Brent crude oil prices to the lowest level in just over two years. Barclays analysts said in a note that oil output was picking up from OPEC countries most likely to face supply bottlenecks such as Iran, Libya, Iraq and Nigeria.
Investors will scour weekly U.S. oil inventory data due on Tuesday and Wednesday, which could shed more light on supply and demand in the world's largest oil consumer. U.S. commercial crude oil inventories are forecast to have increased 1.8 million barrels in the week to Aug. 22, while refined product stockpiles fell, a preliminary Reuters survey of four analysts showed on Monday.