Oil Opens Higher on Greek Talks

NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened higher before reversing lower then turning mixed, as the oil complex remains volatile ahead of federal weekly oil supply data that could show a recovery in demand.

The oil futures complex has seesawed with every twist and turn in the Greek debt talks. Negotiations resumed in the last two hours after a news report earlier this morning suggested creditors had rejected a new reform proposal by Greece.

Aside from Greece, traders are also keeping a watchful eye on economic data and weekly petroleum supply data. The Bureau of Economic Analysis confirmed Wednesday morning the U.S. economy shrank during the first three months of the year but not as much as initially thought.

BEA said U.S. Gross Domestic Product contracted at an annualized rate of 0.2% compared with the second estimate that showed a 0.7% contraction. In Europe, the Ifo index showed confidence on the German economy fell to a four-month low this month.

Oil traders now await the release of weekly supply data by the U.S. Energy Information Administration due out at 9:30 a.m. CT.

At 8 a.m. CT, NYMEX August WTI contract opened up 4 cents at $61.05 bbl, off a two-week high of $61.57. ICE August Brent futures opened 6 cents lower at $64.39 bbl, off a five-day high of $65.05.

In products trade, NYMEX July ULSD futures edged up 0.14 cents to a $1.9126 gallon open, off a four-day high of $1.9298. NYMEX July RBOB futures rose 1.64 cents to a $2.0930 gallon open, off a three-day high at $2.1092.

Late Tuesday, the American Petroleum Institute reported a 3.2 million bbl U.S. crude stock draw for the week-ended June 19, with crude stocks at the Cushing, Oklahoma, supply hub that also functions as the delivery point for NYMEX-traded West Texas Intermediate crude contract down 2.0 million bbl.

A Schneider Electric survey showed analysts forecast a domestic crude oil stock draw of 2.0 million bbl for the week, with Cushing supplies expected to have declined by 700,000 bbl.

On products, the Schneider Electric survey shows gasoline stockpiles are expected to have declined by 300,000 bbl while distillate fuel supplies are expected to have increased by 200,000 bbl last week.

Separately, a new report released Wednesday morning by Barclays Capital shows Chinese oil demand moderated in May despite recent reports suggesting demand there was strong.

Traders will continue to keep a watchful eye on the dollar gyration, with the greenback angling lower from a better than one-week high.

George Orwel can be reached at george.orwel@telventdtn.com