Oil Ends Mixed as Supply Data Eyed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed Tuesday afternoon with the RBOB contract lower while crude and ULSD futures settled higher on a forecast for another weekly crude stock draw, a weaker dollar and expiration-related trade for the August West Texas Intermediate contract, although concerns over demand capped the upside. RBOB futures were undermined by expectations for another weekly build in inventories to be reported for last week, analysts said.

“The weakening of the dollar is giving some support to WTI, but the gains were mostly due to expectation for a stock draw and expiration of the August [WTI] contract,” said analyst Phil Flynn at Price Futures.

“The [oil] markets have turned modestly higher, with a minor retreat in the U.S. dollar allowing a recovery from short-term oversold levels,” said Citi Futures analyst Tim Evans. “Book squaring ahead of today’s August WTI crude oil expiration and upcoming U.S. weekly inventory data may also include some buying.”

The NYMEX August WTI crude contract expired 21 cents higher at $50.36 bbl, reversing from a fresh 3-1/2 month low on the spot continuation chart of $49.77. The September WTI crude futures settled 42 cents higher at $50.86 bbl.

ICE September Brent crude contract rose 39 cents to a $57.04 bbl settlement, with September Brent crude holding a $6.68 bbl premium over the September WTI contract.

Arbitrage trades increased and gasoline crack spreads were strong, Barclays bank analyst Warren Russell said, citing the Brent/WTI spread that has grown to the widest level in two months.

In products trade, NYMEX August ULSD futures climbed 2.0 cents to a $1.6784 gallon settlement while the NYMEX August RBOB contract eased 0.94 cents to settle at $1.9209 gallon.

On Wall Street, equities fell and the U.S. dollar index weakened to a four-day low from a three-month high on Tuesday that was spurred by expectation a hike in the U.S. federal funds rate this year. A weaker dollar is bullish for oil futures.

A survey of analysts by Schneider Electric showed the market expects a crude stock draw of 2.8 million bbl, with gasoline stocks seen up 800,000 bbl and distillate supply projected to have increased by 2.5 million bbl for the week-ended July 17.

The American Petroleum Institute’s data is due at 3:30 p.m. CDT while the Energy Information Administration will release its report at 9:30 a.m. CDT Wednesday.

In recent days, the oil futures complex came under pressure from expectation that Iran would boost its oil exports once sanctions are lifted following the July 14 deal between Tehran and six world powers.

Reports Tuesday said Iran is moving some of oil supply currently in floating tanks to Asia. The extra supply from Iran would come to the market at a time China's economy is slowing while the European recovery is undermined by the Greek debt crisis, raising fresh questions about global demand after this summer.

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