NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened higher Tuesday morning, rallying after Monday’s sell-off on forecast for a ninth weekly crude stock draw in the United states and fresh hopes for a deal in the Greek debt saga after Greece reportedly responded to an eleventh-hour offer by the European Union.
A deal between Greece and its creditors would avert a looming debt default as Athens won’t pay a scheduled $1.8 billion to the International Monetary Fund due Tuesday.
In addition, the White House expressed confidence a final nuclear deal will be reached with Iran later this week or next week, although negotiators will continue working past Tuesday’s self-imposed deadline to narrow differences on a few sticky issues such as inspections on nuclear sites.
At 8 a.m. CDT, the NYMEX August WTI contract opened up 25 cents at $58.58 bbl, rebounding off a three-week spot low of $57.94. ICE August Brent futures opened 60 cents at $62.61 bbl after inside trade. The Brent premium over WTI expanded 36 cents to a $4.04 bbl open.
In products trade, the NYMEX July ULSD futures contract rallied 1.51 cents to $1.8517 gal at the opening bell, and July RBOB futures climbed by 1.97 cents to a $2.0500 gal.
On Wall Street, U.S. equities edged higher as calm appeared to have returned to the market after the Case-Schiller composite home price index rose in April while reports said a last-ditch effort to revive talks between Greece and its creditors was underway.
The Greek government has been considering a new sweetened offer from Jean-Claude Juncker, president of the European Commission, who this morning proposed favorable bailout terms including reducing by half the 23% value added tax proposed last week.
Accepting the new deal would allow Greece to avert a default that would result if Greece fails to make a scheduled $1.8 billion payment. A short while ago, Bloomberg News reported some movement in the talks, with Greek Prime Minister Alexis Tsipras’ office telling reporters they will ask for a two-year bailout program from the European Stability Mechanism, including debt restructuring. European Stablity Mechanism is separate from EU.
Greek banks remain closed for the second day and with strict capital control, with a slight glimmer of hope remaining that Greece will avoid a default that could negatively impact the global economy and oil demand.
Meantime, nuclear talks between Tehran and six world powers are likely to continue past the June 30 deadline as negotiators in Vienna look to clinch a deal over the next several days that would pave the way for a gradual lifting of sanctions that include restrictions on Iranian crude oil exports.
Diplomats say a final agreement to curb Iran's nuclear program could be signed in early July, but terms suggest crude oil exports will not be permitted to increase until early 2016.
Domestically, an early survey by Schneider Electric shows the market expects crude oil inventories to have been drawn down 2.0 million bbl for the week-ended June 26. Gasoline stocks are expected to have increased by 1.5 million bbl while distillate supplies are seen up 1.75 million bbl, the survey shows.
Also, the second quarter is drawing to a close and a time when book squaring can dominate trading direction. The July 4th holiday will cut this week's trading short, with most markets closed on Friday.
George Orwel can be reached at firstname.lastname@example.org
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