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UPDATE 9-Oil climbs from multi-month lows on China stock market gains

Published 05/08/2015, 07:09 am
© Reuters.  UPDATE 9-Oil climbs from multi-month lows on China stock market gains
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* Brent back at around $50 territory after 6-month low on Monday

* U.S. crude above $45 after 4-month bottom in previous session

* Rebound unlikely to hold due to supply/demand outlook - analysts

* API says U.S. crude stockpiles fell by 2.4 mln barrels last week (Adds API report on U.S. crude inventories, paragraphs 6-7)

By Barani Krishnan

NEW YORK, Aug 4 (Reuters) - Global crude prices rose from multi-month lows on Tuesday, helped by a stock market rally in No. 2 oil consumer China, but abundant supply and a weak demand outlook make crude's rebound unlikely to hold, traders and analysts said.

Brent, the world benchmark for oil, and U.S. crude settled up for the first time in four sessions, a day after Monday's 5 percent rout triggered by weak factory activity in China. ID:nL3N10E1KE

While the recovery was aided by an overnight rise in Chinese equities - and the short-covering normal after a selloff in oil - the widening gulf between demand for crude and projected supply could negate any rally, traders said. ID:nL3N10F1D3

The U.S. Energy Information Administration, the Paris-based International Energy Agency and the Organization of the Petroleum Exporting Countries will give their monthly updates next week on barrels per day (bpd) of oil needed by the market versus that in storage or under production.

In July, OPEC's output reached the highest monthly level in recent history, a Reuters survey found. ID:nL5N10A3WL

Offsetting at least some of that bearish sentiment, the American Petroleum Institute reported that U.S. crude inventories fell by 2.4 million barrels last week, more than the 1.5 million barrels forecast by analysts in a Reuters survey. ID:nZXN04IL00 EIA/S

The report, coming after Tuesday's market close and ahead of official inventory data on Wednesday, helped Brent and U.S. crude futures extend gains slightly in post-settlement trade.

Brent LCOc1 settled up 47 cents, or 1 percent, at $49.99 a barrel. It hit a six-month low on Monday, coming within cents of its 2015 bottom of $49.19.

U.S. crude CLc1 finished up 57 cents, or 1.3 percent, at $45.74. It plumbed a four-month bottom of $45.17 the previous session, about $3 from the year low.

Crude has come under pressure from signs of too much supply and too little demand.

OPEC, which includes Saudi Arabia and other major crude producers, has been producing about 1.7 million bpd in surplus since deciding in November to favor market share over price defense.

The ensuing glut knocked Brent down 18 percent in July. U.S. crude tumbled even more, 21 percent, for its biggest monthly decline since the 2008 financial crisis.

"The bigger picture still points to a retest of 2015 lows," Matt Smith, director of commodity research at New York energy database ClipperData, said, adding that next week's "triumvirate of monthly oil-specific reports" could be the catalyst.

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