DTN Oil

WASHINGTON (DTN) -- Nearby delivery month oil futures on New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled the Tuesday session higher with weakness in the U.S. dollar underpinning gains for the September West Texas Intermediate crude contract while market participants await weekly U.S. crude oil and petroleum products inventory data.

U.S. commercial crude inventories likely decreased by about 3.1 million barrels (bbl) during the week-ended July 31 following the Energy Information Administration's reported 10.6 million drawdown the previous week.

With refinery runs expected to increase marginally, gasoline stocks are expected to decline by 2 million barrels and distillate stocks by 1 million barrels last week.

The American Petroleum Institute will release its weekly estimates at 4:30 p.m. ET Tuesday followed by official data from EIA on Wednesday at 10:30 a.m. ET.

At settlement, the U.S. crude benchmark gained 69 cents to $41.70 bbl and the international Brent crude contract advanced 28 cents to $44.43 bbl. NYMEX ULSD futures for September delivery finished 1.75 cents higher at $1.2584 gallon and the front-month RBOB contract edged up slightly to $1.2143 gallon.

The U.S. dollar extended its decline into Tuesday afternoon, down 0.26% to 93.260 against the basket of the foreign currency, offering some support for the oil complex.

Crude futures came under selling pressure earlier in the session after a Bloomberg survey found crude production from Organization of the Petroleum Exporting Countries jumped by 900,000 barrels per day (bpd) last month to 23.43 million bpd. The increase is mostly driven by output hikes in Saudi Arabia, Kuwait and United Arab Emirates as producers moved to phase out the top-up voluntary cuts in July.

Additionally, data showed Iraq and Nigeria made no progress in implementing their pledged cutbacks, let alone the additional curbs they had pledged in compensation for earlier non-compliance. Private shipping data suggests Nigeria's crude oil exports for September are set to hold steady at 1.59 million bpd while Iraq increased its exports to 2.70 million bpd in July.

Russia, the biggest non-OPEC member in the alliance, also increased production in July, according to preliminary data from the Energy Ministry.

Manufacturing data out of the United States and Eurozone continue to show signs of recovery, albeit from a lower base. Institute of Supply Management data show U.S. manufacturers reported an increase in business activity last month to 54.2 from 52.6 in June, well above the 50-point threshold dividing expanding activity from a contraction, and the highest reading since March 2019.

A notable piece of the ISM data was new orders, which rose to 61.5 versus

56.4 in June as export sales returned to growth. Rebound in new orders and exports might suggest that August should see further output gains that will likely prove supportive for the oil complex. In the Eurozone, manufacturing activity last month expanded for the first time since early 2019 as demand rebounded sharply, a survey showed on Monday.

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

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