NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved higher Tuesday morning on technical support, a weaker dollar and expectations that stock draws for U.S. crude and gasoline occurred last week.
The upside reversal for oil futures from Monday’s multi-month lows was also boosted by a rebound for Chinese and European stock markets, although U.S. stock futures suggest a lower open this morning after retracing early overnight gains. The stock market, which is seen as a barometer for investor confidence and risk appetite, has been volatile in recent weeks.
“The commodity rebound is being led by oil prices that are rebounding after the Shanghai composite closed higher. There’s just a general sense that maybe the selloff [on Monday] was overdone,” said senior analyst Phil Flynn at Price Futures Group in Chicago.
At 8 a.m. CDT, NYMEX September crude futures were 79 cents higher at $45.96 bbl, consolidating above Monday’s 4-1/2 month spot low of $45.08. ICE September Brent futures gained 77 cents to $50.29 bbl, reversing off Monday’s six-month spot low of $49.36. The Brent premium over WTI was little changed at $4.34 bbl.
In products trade, the NYMEX September ULSD futures contract climbed 2.05 cents to $1.5510 gallon while the NYMEX September RBOB futures contract increased 2.90 cents to $1.7035 gallon after inside trade.
The oil futures complex came under selling pressure on Monday amid mounting signs excess supply would linger longer than some analysts had expected, exacerbated by the prospect of weaker global demand for oil. Analysts said the outlook on oil demand has softened in the wake of China's economic slowdown.
In July, NYMEX WTI futures lost 21% in value while ICE Brent lost 18%, the biggest monthly declines in seven years that places both contracts in bear market territory.
The market is keeping a close eye on the July U.S. payroll report due out August 7, and weekly U.S. oil supply data due out Tuesday afternoon from the American Petroleum Institute and Wednesday morning from the Energy Information Administration.
An early survey of analysts shows the market expects a 1.8 million bbl crude oil stock draw, a 1.3 million bbl decline in gasoline stocks and a 1.7 million bbl build in distillate stocks to have occurred last week when the EIA releases its data.
Overseas, oil production by the Organization of the Petroleum Exporting Countries reached the highest monthly level in recent history in July at 31.7 million bpd, according to a survey by Reuters.
Iran's oil minister Bijan Zanganeh said Monday that Tehran was boosting its oil marketing efforts so Iran can lift its exports by 500,000 bpd immediately after the sanctions are lifted later this year. EIA estimated Iran's exports at 1.4 million bpd in June.
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