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(Bloomberg) — Oil trimmed its losses in a bear market as trading volatility advanced to the highest in almost two weeks.
Futures climbed as much as 1 percent in New York. West Texas Intermediate has slumped more than 20 percent the past six weeks, meeting the common definition of a bear market. U.S. crude supplies remain almost 100 million barrels above the five- year average after an unexpected increase through July 17, government data showed Wednesday. A measure of price fluctuations rose to the highest level since July 10.

Oil’s rebound from a six-year low in March has faltered on signs a global surplus will persist. Prices have been swept up in a broad selloff of raw materials, which have fallen to a 13- year low amid concerns about economic growth in China.
“The glut story is persisting,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s a lot of oil and we should be in a period where we’re seeing declines in stockpiles.”

WTI for September delivery rose as much as 47 cents to $48.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $48.78 at 12:05 p.m. Sydney time. The contract slid 74 cents to $48.45 on Thursday. The volume of all futures traded was about 38 percent below the 100-day average. Prices are heading for a fourth weekly decrease, the longest slump since March.

U.S. Supplies

Brent for September settlement was 21 cents higher at $55.48 a barrel on the London-based ICE Futures Europe exchange. The contract fell 86 cents to $55.27 on Thursday. The European benchmark crude was at a premium of $6.70 to WTI.
U.S. crude stockpiles expanded by 2.47 million barrels to 463.9 million last week, Energy Information Administration data showed, compared with a forecast in a Bloomberg survey for supplies to drop by 2.2 million. The nation is producing near the fastest rate in three decades.

The Bloomberg Commodity Index of 22 raw materials extended losses on Thursday to the lowest close since April 2002 and is set for a third weekly decline.

The Chicago Board Options Exchange Crude Oil Volatility Index closed at 38.46 on Thursday. The gauge of hedging costs on the U.S. Oil Fund, the largest exchange-traded fund tracking WTI futures, is heading for the third weekly gain in four weeks.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net Aaron Clark, Sungwoo Park