NEW YORK (DTN) -- New York Mercantile Exchange crude futures were mostly higher Thursday morning, boosted by firming equities amid economic optimism in the United States, data showing a steep draw for weekly domestic crude oil stocks and technical support amid talk the oil market is oversold.
The upside was curbed by a stronger dollar, however, and remains vulnerable to a downside reversal, analysts said.
The Labor Department this morning said weekly jobless claims, a gauge for job layoffs, fell by a more-than-expected 15,000 to 281,000, pointing to a strong U.S. labor market.
The jobless claims data comes a day after U.S. Federal Reserve Chair Janet Yellen said a federal funds rate hike is likely this year and didn't seem worried about the volatile situation in Greece, with Athens closing in on a three-year $95 billion bailout program that would enable the country to pay its debts and remain in the eurozone.
The Greek parliament approved the bailout overnight, clearing the way for creditors to release the funds before the July 20 deadline to repay eurozone debt. The European Central Bank boosted emergency liquidity aid to Greek banks, ECB President Mario Draghi said at the top of the hour, easing uncertainty that has clouded trading.
At the same time, increased interest in short-covering and book-squaring ahead of the expiry of the front-month August ICE Brent contract later Thursday afternoon boosted Brent futures.
At 8 a.m. CDT, the NYMEX August WTI crude oil contract was up 19 cents at $51.60 bbl while ICE August Brent rose 52 cents to $57.57 bbl. The NYMEX August ULSD contract was little changed at $1.6690 gallon while the NYMEX August RBOB contract rose 2.05 cents to $1.8794 gallon.
On Wall Street, U.S. equities were slightly higher, with the dollar surging to a six-week high versus the euro on optimism about the U.S. economy. Yellen said in Congressional testimony that interest rates are likely to rise this year because the economy is improving.
Traders continue to scrutinize what Tuesday’s Iran nuclear deal means to the oil market, which is currently oversupplied. An emerging consensus is the deal may eventually lead to the lifting of sanctions that could allow the OPEC nation to hike its oil exports, but the expected increase in Iranian oil exports will not happen soon, an outlook that has tempered concerns of near term oversupply, at least temporarily.
Iran seeks to raise its oil exports back to the 2.6 million bpd level seen before the U.S. and the European Union imposed sanctions in 2011, up from the current 1.4 million bpd. But accomplishing that goal may take at least a year from October, when the deal is scheduled to be implemented. And after years of underinvestment due to a lack of cash, Iran will struggle to upgrade its oil infrastructure and line up new buyers for its crude oil.
Several former customers are locked in to contracts with other countries that will take time to unwind. Iran has an estimated 40 million bbl in floating storage, analysts said.
Domestically, U.S. commercial crude oil inventories were drawn down 4.3 million bbl to 461.4 million bbl in the week ended July 10, the Energy Information Administration reported Wednesday, which was more than the 3.2 million bbl decline expected by the market.
Total gasoline stocks rose by a modest 58,000 bbl to 218.0 million bbl for the week, falling short of an expected 250,000 bbl build, and that increase was in the blending components category, while finished gasoline stocks declined. Gasoline production also fell by 210,000 bpd to 9.658 million bpd while implied demand during the four weeks ended July 10 for the fuel is 6.5% higher from the comparable year-ago period.
George Orwel can be reached at firstname.lastname@example.org
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