Oil traders and investors expect the US government to report on Wednesday that crude inventories fell 1.4 million barrels last week after a surprise build the previous week that broke a nine-week drawdown.
Futures touched $39.19 earlier, the lowest intraday price since April 18.
However, gasoline inventories shrank by about 3.26 million barrels over the week, which was far more than estimates of a 640,000 barrel fall. On Tuesday, it settled below $40 a barrel the first time since April.
On Thursday, Oil prices inched lower in European trade, after increasing over 3 percent overnight after a larger than expected gasoline draw reduce worries about global oversupply. "We could be in for another gasoline inventory drop next week".
Crude oil prices also went higher due to traders' strategies of making short positions in crude oil after a sell-off of 20% from June highs of $50 a barrel.
Crude oil stockpiles expanded by 1.41 million barrels over the week to July 29, following a 1.67 million barrels rise a week before, while analysts had forecast a drop of 1.74 million barrels. "But an unexpected, greater-than-1-million barrel build to crude stocks despite refinery utilization ticking higher by 0.9 percent should be cause for concern". But the pace at which supply and demand move toward balance looks slow and uncertain and that makes the ride ahead a rocky one with volatility being the only constant. U.S. West Texas Intermediate (WTI) crude was up 38 cents at $40.44 a barrel, after briefly dipping below $40. Total volume traded was 49 percent below the 100-day average.
In London, North Sea Brent for October delivery fell 2 cents to US$44.27 a barrel on the Intercontinental Exchange.
With global oil inventories remaining at elevated levels, West Texas Intermediate crude - the US benchmark - fell below $40 in afternoon trading amid signs of increasing USA production and reduced geopolitical disruption. Factions in Libya reached a deal to re-open oil terminals, and Nigeria restarted payments to former militants as the government seeks a cease-fire, addressing some grievances amid attacks that cut crude production close to a 30-year low. OPEC members are now pumping near record high levels with Saudi Arabia cutting prices in Asia due to strong competition from Iran over market share.