– U.S. crude futures fell to their lowest level in four months before rallying on Tuesday afternoon, ahead of the American Petroleum Institute’s weekly inventory report. On the New York Mercantile Exchange, WTI crude for September delivery fell to $46.70 a barrel, its lowest level since March 24, before rebounding to peak above $48.40 a barrel on a chopping day of trading. Texas Long Sweet futures settled at 47.89, up 0.50 or 1.07% on the session to halt a five-day losing streak. On the Intercontinental Exchange (ICE), brent crude for September delivery traded in a broad range between $52.30 and $54.08, before settling at 53.24, down 0.23 or 0.43% on the session. The spread between the international and U.S. domestic benchmarks of crude stood at 5.35, below Monday’s level of $6.08 at the close. Energy traders could receive further indications on the global supply-demand balance on Tuesday after the close when the API releases its weekly report on U.S. crude stockpiles. A separate government report from the Energy Information Administration (EIA) on Wednesday could show that crude inventories fell mildly by 0.4 million barrels for the week that ended on July 24. Last week, the EIA reported that U.S. crude stockpiles unexpectedly rose by 2.5 million barrels for the week ending on July 27, pushing inventory levels nationwide to 463.9 million, the highest level at this time of year in at least 80 years. Analysts expected a weekly draw of 2.2 million. Industry observers are placing a close eye on U.S. crude prices to determine a level that could force domestic shale producers to issue broad lay-offs and curtail crude output. At its current level, WTI crude futures are approaching March’s yearly-low around $44 a barrel. The high fracking costs associated with shale production make it more profitable for the companies to ramp up production when crude prices are higher. U.S. crude output, however, remains near 9.55 million barrels per day, near its highest levels in more than 40 years. Crude futures are down roughly 40% since the Organization of Petroleum Exporting Countries strategic decision in November to keep its production ceiling above 30 million bpd. Energy traders also await the release of the Federal Open Market Committee’s monetary policy statement on Wednesday upon the completion of their two-day July meeting. The statement could provide further hints on the timing of the Fed’s first interest rate hike in nearly a decade. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose to an intraday high of 97.08 before falling back slightly to 96.81, up 0.19%. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.