* Rebound after Brent hits 2-month low below $46, WTI near
$44
* Weaker dollar helps oil as global equity markets rally
* U.S. crude stocks seen down last week for 8th week in row
* Coming up: API report on U.S. crude inventories 2030 GMT
(New throughout, updating market activity and comments to
settlement)
By Barani Krishnan
NEW YORK, July 12 (Reuters) - Oil prices surged 5 percent on
Tuesday, the biggest daily gain since April, as investors'
covering of short positions and a technical rebound helped lift
the market off two-month lows.
A rally in global equity markets to record highs added to
the upbeat sentiment in oil, while the dollar .DXY fell,
making greenback-denominated oil more attractive to holders of
the euro and other currencies. MKTS/GLOB .N USD/
Expectations were high, too, that trade data due later in
the day would show an eighth straight week of declines in U.S.
crude stockpiles.
"The market's gotten really short over the past two weeks
with everyone focused on weaker fundamentals and now you're
seeing sudden covering," said Scott Shelton, energy futures
broker with ICAP (LON:IAP) in Durham, North Carolina.
Brent crude futures LCOc1 settled up $2.22, or 4.8
percent, at $48.47 per barrel.
U.S. crude's West Texas Intermediate futures CLc1 rose
$2.04, or 4.6 percent, to settle at $46.80.
The biggest advance in a session since April 8 propelled
both benchmarks from two-month lows on Monday when Brent tumbled
to $45.90 and WTI $44.42.
A selloff had started last week after U.S. crude and
gasoline inventory levels pointed to weak demand. A higher count
for U.S. oil drilling rigs and fewer bullish bets by hedge funds
also weighed. RIG/U
"This certainly appears to be a technical correction. My
call was for WTI to test $44.35 and we had almost gotten there,"
said Troy Vincent, analyst at New York-based energy data
provider Clipperdata. "Also, I think the market is hesitant to
move nearer to $40 support so quickly in the middle of summer."
Oil was also supported by producer group OPEC's optimism
that the market was likely to achieve balance in supply-demand
by next year. The U.S. government's Energy Information
Administration (EIA) in a separate report, raised its forecast
for U.S. oil demand growth in 2017. OPEC/O
Even so, the pace of the rally stunned some market
participants. Oil was just about 2 percent higher in New York's
morning trade.
"The sharper move up caught everyone by surprise," said a
crude futures broker.
The rally came ahead of a report on U.S. crude stockpiles
due from trade group American Petroleum Institute (API) at 4:30
p.m. EDT (2030 GMT). A Reuters poll forecast U.S. crude
stockpiles fell 3 million barrels last week, declining for an
eighth week in a row. EIA/S
The EIA will issue official inventory data on Wednesday.