×

US oil settles up 1.8 percent, at $45.23 a barrel

An oil pump jack in the oil town of Gonzales, Texas.
Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

This is a breaking news story. Please check back.

Oil prices rose more than 2 percent on Tuesday as expectations that U.S. crude inventories dropped in the latest week boosted prices after the previous day's slide.

Oil got an early boost as U.S. equity markets rose on strong consumer confidence data in the world's No. 1 economy. As Wall Street retraced much of those gains, oil prices remained up.

Industry group American Petroleum Institute will issue a weekly report on U.S. inventories after Tuesday's market settlement at 4:30 p.m. EDT (2030 GMT).

Read More Halliburton, Baker Hughes plan more divestitures for deal approval

A preliminary Reuters poll on Monday said U.S. crude stockpiles likely fell 500,000 barrels last week, a third straight week of drawdowns.

Genscape, a market intelligence firm, has also alluded to lower stockpiles by suggesting a draw of about 1 million barrels last week at the Cushing, Oklahoma delivery point for U.S. crude inventories.

On Wednesday, the U.S. government's Energy Information Administration (EIA) will issue official weekly inventory data.

"Until a slew of fundamental guidance is presented tomorrow from the EIA, oil appears poised to track US equities for another session," said Jim Ritterbusch of Ritterbusch & Associates, an oil market advisory in North Wabash, Chicago.

Oil prices could be more volatile than usual until Wednesday, the close of September and third-quarter trading.

Read MoreTotal to slash spending by $3B as oil price bites

Brent crude oil was up $1.15, or 2.4 percent, at $48.49 a barrel by 1:56 p.m. EDT (1756 GMT) after dropping 2.5 percent on Monday.

U.S. West Texas Intermediate light crude oil was up $1.17, or 2.6 percent, at $45.60.

Brent and U.S. crude prices fell about 3 percent on Monday. Some traders said the rebound was supported by the International Energy Agency (IEA)'s denial that its chief, Fatih Birol, had told an Austrian newspaper he expected crude to stay at around $45 "for a long time". The IEA is a global energy watchdog.

Oil has had more than a year of dramatic falls and occasional rallies, with Brent swinging from $115 in June 2014 to under $42 in August this year.

Prices of other key raw materials, including copper, have been battered too, squeezing income for commodity producers and triggering a sector-wide crisis. Shares in commodity merchants such as Glencore and Noble have been hit hard.

Read More Icahn raises stake in Cheniere Energy to 11.43 percent

Oil prices appear to have stabilized over the past four weeks, Rhidoy Rashid of London-based consultancy Energy Aspects told the Reuters Global Oil Forum.

"They should find a floor around current levels of $45-$55 in Q4 2015" if they remained steady over the autumn refinery maintenance period, Rashid said.