Crude oil futures rebound after Tuesday's 3% plunge

Investing.com - Crude oil futures attempted to rebound from the previous session's steep declines on Wednesday, as market participants looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.

On the New York Mercantile Exchange, crude oil for July delivery tacked on 70 cents, or 1.2%, to trade at $58.73 a barrel during European morning hours.

A day earlier, New York-traded oil futures fell to $57.71, the lowest level since April 29, before ending down $1.69, or 2.83%, at $58.03, as a broadly stronger U.S. dollar and concerns that U.S. shale production could rebound in the months ahead weighed.

The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show crude stockpiles fell by 2.0 million barrels in the week ended May 22.

The reports come out one day later than usual due to the Memorial Day holiday in the U.S. on Monday.

Indications that the sharp decline in U.S. drilling activity in recent months may be nearing an end also weighed. According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by only one last week to 659.

Oil traders have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

However, the rate of decline has slowed in recent weeks, fuelling concerns that some shale oil companies will dial up their output in the months ahead if prices stabilize near current levels.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery rose 58 cents, or 0.92%, to trade at $64.30 a barrel. On Tuesday, Brent prices slumped to $63.29, a level not seen since April 23, before closing at $63.72, down $1.80, or 2.75%.

London-traded Brent prices were supported amid speculation an Iran nuclear deal is not likely by June 30, easing concerns over a flood of crude exports from Tehran in the near-term.

The Organization of Petroleum Exporting Counties is expected to keep production levels unchanged when it meets on June 5, despite ongoing concerns over ample global supplies.

Meanwhile, the euro and the yen pushed higher against the U.S. dollar on Wednesday, as the greenback paused following a rally on the back of expectations for a U.S. rate hike later this year.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.37% to 97.03, off the five-week peaks of 97.47 set on Tuesday.

The dollar surged on Tuesday after data showed that U.S. business investment plans increased, consumer confidence improved and new home sales jumped.

The upbeat data supported the view that the Federal Reserve could start to raise interest rates later in the year if the economy continues to improve as expected.