RBOB Rally Boosts NYMEX Oil Futures

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Wednesday afternoon, with the RBOB contract rallying on bullish supply and demand data released midmorning by the U.S. Energy Information Administration, while crude futures trimmed gains after the same report showed a less-than-expected weekly stock draw for crude. NYMEX ULSD futures advanced despite a larger-than-expected stock build for distillate fuel during the first week of August was reported by the EIA.

The NYMEX September West Texas Intermediate crude oil futures contract rose 22 cents to $43.30 barrel (bbl) at settlement, trimming gains from a session high of $43.87 bbl. ICE Brent futures settled 48 cents higher at $49.66 bbl, off a session high of $50.01, with the Brent premium over WTI rising 26 cents to $6.36 bbl at the close.

In products trade, the NYMEX September ULSD futures contract settled 2.40 cents higher at $1.5869 gallon, edging off a session high of $1.5978, while the September RBOB futures contract spiked 6.98 cents to a $1.7635 gallon settlement, moving off a better-than one-week high of $1.7725.

On Wall Street, major U.S. stock indices revered higher this afternoon on risk-on trade while the dollar cratered.

The oil market was off to a strong start, with futures rising in overnight trade as the U.S. dollar tumbled to a one-week low after China devalued its currency for the second straight day, bringing total depreciation of the yuan to 3.5% since Tuesday, the biggest devaluation in more than a two decades.

Several analysts suggest the move by Beijing is to accelerate the country's economic growth after data Monday showed exports plunged in July by 8.3%, the steepest fall in four months.

Today's advance by oil futures was also supported by a monthly report from the International Energy Agency, with the IEA in its Oil Market Report for August released this morning saying global oil demand in 2015 is expected to grow by 1.6 million barrels per day (bpd) from a year ago, up 200,000 bpd versus its estimate published in July.

That's the fastest projected global oil demand growth rate in five years, spurred by a pickup in economic growth and consumers responding to lower oil prices. In 2016, persistent macroeconomic strength would support global demand and is expected to grow at a 1.4 million bpd rate, IEA added.

During midmorning trade, EIA issued its weekly data showing domestic crude stocks declined 1.7 million bbl last week while the market expected a 2.3 million bbl crude stock draw and the American Petroleum Institute late Tuesday reported an 800,000 bbl draw.

EIA also reported a 1.3 million bbl gasoline stock draw versus an expected 1.0 million bbl decline. The report showed a 3.0 million bbl distillate stock build versus an expected 500,000 bbl rise.

On the demand, EIA reported a weekly decline of 1,000 bpd for gasoline and a 235,000 bpd weekly drop for distillates, with crude input into refineries down 46,000 bpd for the week reviewed. EIA shows implied gasoline demand up 6.6% against year ago during the four weeks ended Aug. 7 at 9.615 million bpd.

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