Oil pared losses

West Texas Intermediate crude pared losses after a U.S. report showed that inventories dropped a fourth week, the longest stretch of declines since August.

Futures rebounded after the Energy Information Administration said that supplies slipped 2.83 million barrels to 364.2 million. Analysts surveyed by Bloomberg had projected a 2.8 million-barrel decrease. Prices dipped earlier as Chinese manufacturing contracted more than economists estimated, bolstering concern that economic growth will slow in the world’s biggest energy-consuming country.

WTI oil for September delivery slipped 44 cents, or 0.4 percent, to $106.79 a barrel at 10:40 a.m. on the New York Mercantile Exchange. The contract traded at $106.40 before the release of the EIA report at 10:30 a.m. in Washington. The volume of all futures traded was 36 percent less than the 100-day average for the time of day.

Brent crude for September settlement dropped 83 cents, or 0.8 percent, to $107.59 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 23 percent below the 100-day average. The European benchmark grade traded at an 80-cent premium to WTI, down from $1.19 yesterday. Brent slid below the U.S. grade in intraday trading on July 19 for the first time since August 2010.