DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved higher in pre-inventory trade Wednesday, boosted by a surprise drop in U.S. commercial crude-oil supplies as detailed in industry data and by a sagging U.S. dollar as market participants await a key policy statement from Federal Reserve at 2 p.m. ET.

Near 7:00 a.m. ET, NYMEX September West Texas Intermediate futures gained 40 cents to trade at $41.45 per barrel (bbl), with the Brent crude contract for September delivery advancing 60 cents to $43.83 bbl. NYMEX ULSD August futures traded 1.07 cents higher at $1.2528 gallon, with next-month September futures expanding its premium to 0.73 cents. The front-month RBOB contract traded slightly higher at $1.2656 gallon and RBOB futures for September delivery traded with a 3.04-cent discount.

The American Petroleum Institute reported domestic crude-oil stocks decreased 6.829 million bbl during the week ended July 24, contrary to expectations for a 2.1 million bbl build. Inventories at the Cushing hub in Oklahoma rose 1.144 million bbl. The data showed gasoline stockpiles increased 1.083 million bbl and distillate supplies gained 187,000 bbl on the week. Market participants now wait for official supply data from the U.S. Energy Information Administration due out 10:30 a.m. ET.

Also Wednesday, the Federal Reserve will publish the results of the two-day scheduled meeting, with Chairman Powell delivering a press conference 30 minutes afterwards. No changes in the rate or stimulus programs are expected. However, the Chairman's comments on the state of economic recovery will be closely watched by the markets. Last month, when the committee published its quarterly forecasts, there were hopes for a gradual recovery. However, since then the number of infections have spiked and new restrictions had to be introduced to halt the spread. Six U.S. states reported record coronavirus deaths on Tuesday, adding to concerns that the resurgence could trigger fresh business and travel restrictions, as well as school closures. Index of consumer confidence fell to 92.6 this month from a revised 98.3 in June, the Conference Board said Tuesday. Markets mostly expected a stronger reading of 96.0. “Consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects,” said Lynn Franco, senior director of economic indicators at the board. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.”

Against this backdrop, the U.S. dollar fell to a fresh two-year low 93.485 against a basket of its global peers, with greenback dropping some 2.6% since the last Fed meeting in June, and is down a staggering 8.8% since the central bank started aggressively expanding its balance sheet -- which currently sits at $7 trillion -- in late March.

Liubov Georges can be reached at liubov.georges@dtn.com

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