NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened mixed with an upside bias Tuesday morning amid expectations weekly supply data will show a draw in crude oil inventories in the United States for the seventh straight week.
Recent federal data showed product demand improved during the first week of June, with analysts expecting summertime gasoline consumption to continue trending higher.
The upside for crude futures was also buoyed by a warning a tropical storm would bring heavy rains to the Texas coast, threatening refineries operating between Corpus Christi and Galveston.
However, the upside for oil futures was capped by a strong dollar and lingering concerns about the Greek debt crisis. U.S. housing data issued this morning was mixed, showing a plunge in housing starts but higher building permits.
At 8 a.m. CDT, NYMEX July WTI crude futures opened up 10 cents at $59.62 bbl while ICE August Brent contract opened 25 cents lower at $63.70 bbl. The July Brent contract expired on Monday.
In spread trade, the August Brent was trading at a $3.75 premium over August WTI at the market open.
In products trade, NYMEX July ULSD futures opened 0.30 cents lower at $1.8673 while the July RBOB futures contract edged up 0.36 cents to a $2.1027 gallon open.
On Wall Street, equities were lower this morning while the dollar edged higher versus the euro as the standoff between Greece and its lenders continues and investors await a decision from the U.S. Federal Reserve on it will hike the federal funds rate. The Federal Open Market Committee starts meeting today and will issue a press conference on Wednesday.
The gyration of the greenback typically has an inverse impact on dollar-priced commodities such as oil, with a stronger dollar generally bearish for oil prices. The market continues to follow news from Europe where Greece and Eurozone officials hardened their positions in debt negotiations. The ZEW economic sentiment in Germany fell to a seven-month low of 31.5 points in June from 41.9 points.
On supply, an early survey of analysts shows the market expects crude inventories to have been drawn down by 3.0 million bbl while gasoline and distillate fuel stocks are projected to have increased 1.5 million and 2.0 million bbl respectively as refinery runs are seen up 0.3% at 94.9% for the week reviewed.
Analysts also expect the report to show improving fuel demand as the peak-summer driving season gets underway. EIA's report for the week-ended June 5 showed gasoline demand soared 11.3% year-on-year while distillate demand jumped 6% vs. the year prior.
Despite a 60% drop in oil-drilling rigs since last year, domestic oil production has edged higher to 9.61 million bpd, the highest in nearly three decades.
Also, oil traders will be tracking Tropical Storm Bill that is expected to dump torrential rains on an already saturated Texas beginning Tuesday. The National Hurricane Center issued a storm warning this morning for the Texas Coast. Oil companies have reportedly evacuated non-essential staff from offshore Gulf of Mexico platforms.
George Orwel can be reached at email@example.com
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