U.S. oil prices top $59 ahead of API supply data

Investing.com - West Texas Intermediate oil futures turned higher on Tuesday, as traders looked ahead to weekly data on U.S. stockpiles of crude and refined products later in the day.

On the New York Mercantile Exchange, crude oil for August delivery hit a session low of $57.96, a level not seen since June 5, before recovering to trade at $59.01 during U.S. morning hours, up 68 cents, or 1.11%. On Monday, Nymex oil tumbled $1.30, or 2.18%, to end at $58.33.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 2.1 million barrels in the week ended June 26.

Worries over high domestic U.S. oil production, despite a declining rig count, have weighed on prices in recent weeks.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by three last week to 628. The drop marks the 29th straight week of declines.

However, U.S. oil production has held around 9.6 million barrels a day in recent weeks, the highest level since the early 1970s.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for August delivery jumped $1.16, or 1.88%, to trade at $63.17 a barrel. A day earlier, London-traded Brent futures hit $61.35, the weakest level since June 5, before closing down $1.25, or 1.98%, at $62.01.

The spread between the Brent and the WTI crude contracts stood at $4.16 a barrel, compared to $3.68 by close of trade on Monday.

Oil found support following a report that efforts to resume negotiations between Greece and its creditors are underway, fueling hopes for a last-minute deal.

Greece requested a new two-year bailout program, just hours ahead of a deadline for what looked to be an almost certain debt default by Athens.

The Greek government requested a new bailout from the European Stability Mechanism to cover the country’s financial need for the next two years, which would run alongside debt restructuring.

In a statement the government said it will continue negotiations seeking a “viable agreement” within the euro area. It was unclear what the response from the country’s creditors would be.

Greece’s existing bailout program officially expires at midnight and €1.6 billion loan repayment to the International Monetary Fund is due at the same time.

Without a rescue package in place Athens will almost certainly fall into arrears. Earlier in the day Greek Finance Minister Yanis Varoufakis said Athens would not make the deadline for the repayment.

A default by Greece would add to fears over the country’s solvency and fuel doubts over the condition of Greek banks and the collateral they use for European Central Bank loans.

Meanwhile, oil traders awaited the outcome of talks between Iran and world powers over Tehran's nuclear program, which could result in a flood of Iranian crude returning to the market which is already oversupplied.

A final nuclear agreement between Western powers and Iran over the country’s nuclear program is due June 30, but officials already acknowledged that talks will likely extend beyond the deadline.