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Crude climbed a second day after tumbling to a six-year low amid signs the U.S. may allow unfettered exports for the first time in 40 years.

West Texas Intermediate rose 2.8 percent, adding to Monday’s 1.9 percent gain amid a broader rally of U.S. and European stocks. House Democrats are open to lifting the ban on American crude exports if they get adequate concessions in exchange, a Democratic leadership aide said Monday. U.S. crude supplies probably fell last week, according to a Bloomberg survey before government data on Wednesday.

Oil is trading close to levels last seen during the global financial crisis this week after the Organization of Petroleum Exporting Countries effectively abandoned output limits in an effort to defend market share. Repealing the restrictions on shipping U.S. crude overseas could open new markets, buoying the price of domestic crude grades.

"We might have put in a bottom for now," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. "A lifting of the export ban should spark a short-term buying spurt, especially in the WTI-Brent spread. Political headlines over the next few days should knock us around."

U.S. Exports

WTI for January delivery rose $1.04 to close at $37.35 a barrel on the New York Mercantile Exchange. The U.S. benchmark slid below $35 a barrel Monday for the first time since February 2009. The volume of all futures traded was 35 percent above the 100-day average at 4:45 p.m. The gap between WTI and Brent -- the North Sea grade used globally -- shrank to $1.10 a barrel at today’s close, the narrowest gap since January.

Futures retreated from the close after the American Petroleum Institute was said to report U.S. crude supplies rose 2.3 million barrels last week. WTI traded at $36.70 at 4:43 p.m.

Brent for January settlement, which expires Wednesday, rose 53 cents, or 1.4 percent, to end the session at $38.45 a barrel on the London-based ICE Futures Europe exchange. The more-active February contract increased 57 cents to $38.73.

"This is an inevitable correction that happens whenever you drop so far," said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. "The market has set its sites on the Great Recession lows we recently tested. Prices have a lot lower to go until we see signs that the market is moving into balance."

WTI Discount

WTI has traded at a discount to Brent for most of the past five years as U.S. output surged with the shale drilling boom. The restriction on crude exports was established during the energy shortages of the 1970s. Repealing the ban would put U.S. crude on the same footing as refined products such as gasoline, which can be freely sold overseas.

Any removal of the U.S. export curbs won’t affect oil prices, OPEC Secretary-General Abdalla El-Badri said in New Delhi on Tuesday. Prices won’t continue at current depressed levels as global markets will rebalance, he said.

OPEC failed to agree to production limits at a Dec. 4 meeting, instead setting aside its quota of 30 million barrels a day until the next gathering in June. Members are showing “ renewed determination” to maximize output, the International Energy Agency said in a report last week.

"We’re seeing bargain-hunting after nearly breaking through the December lows," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "Supply is still running ahead of demand and there will probably be more Iranian supply on the market early next year, so we’re still at risk of a further decline."

Stockpile Decline

U.S. crude inventories probably decreased by 1.5 million barrels last week, according to the Bloomberg survey before Wednesday’s Energy Information Administration report. Stockpiles stood at 485.9 million barrels on Dec. 4, about 120 million above the five-year seasonal average.

WTI may fall into the high $20s if tanks used to store crude start to fill up before producers sufficiently curb output, Citigroup Inc. Managing Director Ed Morse said. Brent would need to decline to about $30, he said.

“The quarter ahead looks a good deal more bearish than the quarter just ending,” Morse said in a report. “The already oversupplied market now faces the imminent return of Iranian barrels and onshore storage capacity constraints look set to be tested in the first half.”