Oil Settles Mixed on Strong Supply
NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mixed with an upside bias Wednesday morning led by an RBOB rally ahead of the release of weekly data from the Energy Information that’s expected to show stock draws for domestic crude oil and gasoline inventories.
At 8 a.m. CDT, the NYMEX August WTI crude contract were 15 cents lower at $52.18 bbl while the ICE August Brent crude futures contract rose 26 cents to $57.11 bbl.
In products trade, the NYMEX August ULSD contract was up 0.34 cents at $1.7147 gallon while the NYMEX August RBOB contract jumped 4.61 cents to $1.9955 gallon.
The oil futures complex was supported in early trade by bullish weekly crude and gasoline supply data from the American Petroleum Institute, as well as by a weaker U.S. dollar, optimism Greek woes would be resolved and prolonged Iranian nuclear talks that might delay plans by Tehran to increase its oil exports should there be a deal with world powers over the next few days.
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The RBOB contract was the strongest segment of the oil futures complex, rallying after API late Tuesday reported a larger-than-expected 2.0 million bbl gasoline stock draw for the week ended July 3. The market expected a 500,000 bbl draw.
The WTI crude futures contract was the weakest part of the complex, with the API reporting an expected 1.0 million bbl weekly crude stock draw.
The Energy Information Administration is set to release its weekly supply data at 9:30 a.m. CDT.
Traders are also paying attention to the turmoil in Chinese stock markets, which plunged 6% overnight as risk-averse investors fled despite attempts by the Chinese government to prop up the market. Investor confidence on China is shaken, and some fear the turmoil there reflects broader economic problems that could reduce demand for oil.
“China’s stock market turmoil drove down commodities again today but word that Greece formally requested a three-year bailout package from the European Union is raising hope yet again that maybe just maybe Greece can be saved and we can continue to kick the Greece can down the road for another few years,” said analyst Phil Flynn at Price Futures Group in Chicago.
On Wall Street, U.S. markets tracked European bourses higher on optimism Greece would most likely reach deal with its creditors later this week to stop the bleeding and avert harm to the broader eurozone economy. Greece this morning extended a bank holiday and capital control through Friday.
The dollar eased off a five-week high vs. a basket of six major rival currencies after Greece requested a three-year bailout program from the eurozone's rescue fund, the European Stability Mechanism.
The EU then gave Greece until Sunday to produce a plan or be kicked out of the euro, so this latest move represents progress. The plan shows promises by Greece to implement tax and pension reforms as early as next week, according to The Wall Street Journal.
George Orwel can be reached at george.orwel@dtn.com
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