NEW YORK (Bloomberg) -- Oil climbed from a two-week low amid expectations a government report will show a slowdown in drilling has trimmed U.S. crude supplies -- a sign that the oil glut might finally be shrinking.

U.S. stockpiles probably slipped 250,000 barrels last week, according to a Bloomberg survey before the release of Energy Information Administration data on Wednesday. Crude production in the U.S. has declined in six of the past seven weeks after low prices forced drillers to idle rigs. Financial markets showed signs of stabilizing after a rout Monday wiped $800 billion off global equities.

Even with today’s price gain, crude is still more than 25% below this year’s high in June. China’s industrial data continue to signal economic weakness and U.S. supplies remain almost 100 million bbl above their five-year seasonal average for this time of year. The rout contributed to Royal Dutch Shell Plc’s decision to abandon its $7 billion search for oil in Alaska.

"The main support for the market comes from expectations that U.S. and Canadian oil production are going to continue to fall for the next six months," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "I think we’ll continue to consolidate around these six-year lows for a while."

WTI, Brent

West Texas Intermediate for November delivery rose $0.38, or 0.9%, to $44.81/bbl at 9:23 a.m. on the New York Mercantile Exchange. Prices fell $1.27 to $44.43 on Monday, the lowest settlement since Sept. 14. The volume of all futures traded was 33% below the 100-day average.

Brent for November settlement increased $0.53, or 1.1%, to $47.87/bbl on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $3.06 to WTI.

Stockpiles in the U.S. probably shrank for the third consecutive week, a Bloomberg survey showed. Production started dropping in July after hitting the highest level in almost three decades as lower prices forced producers to slow drilling.

Vitol Group, the world’s largest independent oil trader, expects inventories to expand or remain at current levels in coming months, Tom Ramsey, head of the company’s North American crude-oil marketing and midstream operations, said Monday. Output from the Permian Basin in the U.S. will increase by about 5% to 8% next year, he said.

Commodity Slump

The Bloomberg Commodity Index, a measure of returns for 22 raw materials, has tumbled about 15% since June 30, heading for the worst quarter since the end of 2008.

Shell said Monday it had abandoned exploration off Alaska for the “foreseeable future” after it failed to find meaningful quantities of oil or natural gas.