WTI oil settles higher, but sub-$40 levels may be on tap

U.S. oil futures settled higher on Tuesday, but analysts warned that a global supply glut and a potential slowdown in Chinese demand could help pull prices below $40 a barrel.

September WTI crude CLU5, -0.59% tacked on 75 cents, or 1.8%, to settle at $42.62 a barrel on the New York Mercantile Exchange. On Monday, prices shed 1.5% to settle at $41.87, the lowest settlement level for a front-month contract since March 2009.

“Fears of a sustained slowdown in China is oil’s biggest hurdle,” said Phil Flynn, senior market analyst at Price Futures Group. But “China is throwing a lot of money and stimulus which could keep oil demand strong,” and that’s likely providing some support to oil prices, he said.

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