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By Bloomberg

Oil trimmed its biggest monthly drop this year as U.S. crude output slipped and stockpiles unexpectedly declined.

Futures were little changed in New York after rising 1.7 percent Wednesday. Inventories decreased by 4.2 million barrels to 459.7 million through July 24, government data showed, compared with a forecast in a Bloomberg survey for supplies to increase by 850,000 barrels. U.S. production fell the most since October 2013 to the lowest level in more than two months.

Oil is heading for the biggest monthly loss since December after tumbling into a bear market amid speculation the global glut will persist. Leading members of OPEC are pumping record volumes to defend market share, while U.S. crude inventories are almost 100 million barrels above the five-year average.

“It’s a relief to see that supplies aren’t continuing to rise,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Any rally in oil is going to be capped until we see significant supply cuts.”

West Texas Intermediate for September delivery was at $48.86 a barrel in electronic trading on the New York Mercantile Exchange, up 7 cents, at 2:38 p.m. Sydney time. The contract gained 81 cents to $48.79 on Wednesday. The volume of all futures traded was about 47 percent below the 100-day average. Prices have lost more than 20 percent from their closing peak this year on June 10.

U.S. Output

Brent for September settlement was 29 cents higher at $53.67 a barrel on the London-based ICE Futures Europe exchange. It climbed 8 cents to $53.38 on Wednesday. The European benchmark crude traded at a premium of $4.76 to WTI.

U.S. crude output dropped by 145,000 barrels a day to 9.41 million a day last week, the Energy Information Administration said Wednesday. That’s the lowest level since the week ended May 15 when production averaged 9.26 million a day.

Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest oil-storage hub in the U.S., fell by 212,000 barrels to 57.7 million, the EIA said. It was the first inventory decline in five weeks.

Supplies outside of the Organization of Petroleum Exporting Countries are holding up against collapsing prices, signaling crude has further to fall before global markets rebalance, according to Citigroup Inc. Production from Brazil, Russia, Canada and the North Sea have gained this year even after Brent slid to a six-year low in January, the bank said.