Global oil prices stabilized in European trading after slipping into so-called bear market territory Wednesday as investors continue to bet that a glut in supply, as well as tepid gasoline demand in the United States, will continue to offset OPEC's agreed production cuts.
West Texas Intermediate crude futures for August delivery, the new benchmark contract, was marked 0.2% lower at $43.40 while Brent contracts for the same month were seen 0.9% lower from Tuesday's New York closing price at $460.01 per barrel by 10:45 London time.
The Stoxx Europe 600 Oil & Gas index, the region's sector benchmark, was marked 0.7% lower by mid-morning in London while U.K.-based oil majors BP plc (BP) - Get BP p.l.c. Sponsored ADR Report and Royal Dutch Shell Plc (RDS.A) pared earlier losses to trade 0.5% and 0.4% lower on the session respectively.
Oil prices have struggled to escape from 8-month lows over the past few sessions, even with data from the American Petroleum Institute showing a bigger-than-expected decline in U.S. crude stocks for the week ending June 16.
The API data, which also showed a build-up in gasoline inventories as Americans head into the peak of the summer driving season, has raised further questions about the resilience of fuel demand and the changing nature of consumer habits in an online world.
Oil majors are likely to struggle in early European trading, and that is expected to hold down gains for the FTSE 100, which is expected to open around 20 points lower by financial bookmakers IG.
The global oil price slump, which has seen prices fall more than 20% from their Feb. 21 peak of $54.64 - a condition that analysts typically describe as a bear market - has pulled down government bond yields as investors re-set expectations for energy-led inflation.
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