NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher for the first time in four sessions, rising ahead of weekly supply data that's expected to show a draw in domestic crude oil inventories for a seventh straight week.
However, the upside was limited by a stronger U.S. dollar and worries over the Greek debt crisis.
The oil futures rally was also spurred by fears a tropical storm in the U.S. Gulf Coast could disrupt supplies. The National Hurricane Center warned of heavy rains that could cause flooding and shut refineries located between Corpus Christi and Galveston.
"The U.S. product markets [are] holding gains as Tropical Storm Bill may interfere with refinery operations along the Texas Coast," said analyst Tim Evans at Citi Futures in New York. "At a minimum, the storm has the potential to disrupt the timing of deliveries of crude oil from abroad as well as product export shipments."
Oil companies have reportedly evacuated non-essential staff from offshore Gulf of Mexico platforms.
NYMEX July WTI crude futures settled 45 cents higher at $59.97 bbl, off a two-day spot high of $60.37. ICE August Brent contract settled 25 cents higher at $63.70 bbl, off a two-day spot high of $64.41. July Brent expired Monday. In spread trade, the August Brent traded at a $3.75 premium over WTI at the market close, up 73 cents from a day earlier.
In products trade, NYMEX July ULSD futures settled 1.46 cents higher at $1.8849 after inside trade, while the July RBOB futures contract settled up 2.54 cents at $2.1245 gallon, off a two-day spot high of $2.1331.
On Wall Street, equities reversed higher Tuesday afternoon, with the dollar also edging higher vs. the euro as the standoff between Greece and its lenders continues.
Investors also await a decision from the U.S. Federal Reserve on when it will raise the federal funds rate. The Federal Open Market Committee started meeting Tuesday and will issue a statement Wednesday afternoon.
The market also continues to follow news from Europe where Greek and eurozone officials hardened their positions in debt negotiations, pressuring the euro lower versus the dollar. The gyration of the greenback has an inverse impact on dollar-priced commodities such as oil, with a stronger dollar generally bearish for oil prices.
In other economic news, the ZEW economic sentiment in Germany fell to a seven-month low of 31.5 points in June from 41.9 points, while U.S. housing data were mixed.
"We continue to see ongoing worry that Greece may default on its debt, with the uncertainty over the outcome limiting Brent market sentiment," said Evans.
On supply, a Schneider Electric survey shows crude stocks are expected to have been drawn down by 1.8 million bbl in the week-ended June 12 while gasoline stocks are projected to have held unchanged and distillate fuel stocks are seen up 700,000 bbl.
The American Petroleum Institute is set to issue its weekly data at 4:30 PM ET while the Energy Information Administration is scheduled to release its weekly report at 9:30 a.m. CDT Wednesday.
EIA's data for the week ended June 5 showed that 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.
George Orwel can be reached at email@example.com
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