U.S Crude futures fall mildly, as fears of softening demand persist

Investing.com - Investing.com -- U.S. crude futures fell mildly on Tuesday paring some losses late in the session, amid continued fears of softening demand throughout global energy markets.
On the New York Mercantile Exchange, WTI crude for November delivery traded between $45.38 and $46.74 a barrel before settling at $46.30, down 0.64 or 1.34% on the session. After soaring by more than 25% in a three-day span late last month, crude prices remain volatile. Over the last month of trading, U.S. crude futures have moved in a positive or negative direction by 2% or more 13 times in the last month. During that span, crude prices have fluctuated at least 4% on eight different occasions.
While WTI Crude is up by nearly 14% from its six-and-a-half year low in August, it still remains down by more than 40% from its level 12 months ago.
On the Intercontinental Exchange (ICE), brent crude for November delivery wavered between $47.70 and $49.17 a barrel, before closing at $49.03, up 0.11 or 0.22% on the day. The spread between the international and U.S. benchmarks of crude stood at $2.73, remaining at near eight-month lows.
Investors await the release of the American Petroleum Institute's weekly crude inventory after the bell on Tuesday for further indications on the supply-demand balance in U.S. markets. Last week, WTI crude futures soared by nearly 6% in Wednesday's session, after the U.S. Energy Information Administration (EIA) reported a significant draw in crude stockpiles over the previous week. For the week ending on Sept. 11, crude inventories nationwide fell by 2.1 million to 455.9 million barrels, near its highest level at this time of year in at least 80 years. Wednesday's government report could show that U.S. crude inventories fell by another 1.0 million barrels for the week ending Sept. 18.
Oil prices have dropped considerably since OPEC rattled energy markets last November with a strategic decision to leave its production ceiling unchanged in an attempt to regain market share. The initiative was reportedly aimed at undercutting U.S. shale producers, which face higher drilling costs. As a result, crude prices worldwide have fallen precipitously amid a glut of oversupply on global markets. The EIA expects the supply-demand gap in the U.S. this year to exceed 2.0 million bpd.
The oil crash has reportedly created a large source of tension between Saudi Arabia and a host of smaller OPEC members, whose nations are heavily dependent on oil exports for stabilizing their economies. Last week, OPEC predicted that oil prices could return back to $55 a barrel by the end of the year and $80 by 2020, as production wanes. Venezuela and Iran, meanwhile, would like to see crude move back up near $70 over the final months of the year.
Elsewhere, investors await the release of manufacturing data in China for further indications of the economic health of the world's second-largest economy. On Tuesday, the Asian Development Bank lowered its 2015 economic growth projections for China from 7.2% and 6.8%. The U.S. and China are the top two importers of oil in the world, each bringing in more than 7.0 million barrels per day.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.6% to an intraday high of 96.58, its highest level in nearly two weeks. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.