Oil Futures Gain Ahead of EIA Data

Oil Futures Gain Ahead of EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were rising this morning as part of a global market rally ignited by Federal Reserve Chair Janet Yellen's dovish stance on raising interest rates that weakened the dollar and prompted risk-on trade.

The oil futures gains came ahead of the Energy Information Administration's weekly oil data that's expected to show another stock build for domestic crude oil inventories.

Aside from the EIA data, the market is also looking ahead to Friday's payroll report from the Bureau of Labor Statistics, and after private payroll firm ADP this morning estimated the economy added 200,000 jobs this month. The ADP data added optimism in the market.

At 9:00 AM ET, NYMEX May West Texas Intermediate crude oil futures rose 94cts to $39.22 bbl while May Brent futures traded on the IntercontinentalExchange advanced 79cts to $39.93 bbl

In products trade, NYMEX April ULSD futures surged 2.97cts to $1.1852 gallon while April RBOB futures edged up 0.54cts to $1.4592 gallon.

The ICE May Brent contract and NYMEX April products contracts will expire on Thursday (3/31).

On Wall Street, major stock indices extend their rallies while the dollar fell against the yen, the euro and four additional peer currencies, declining to a near two-week low after Yellen said the central bank will move cautiously on interest rate increases in light of risks to the U.S. economy from the global economic slowdown, low oil prices and mixed U.S. data.

She added that while the central bank still has "tools" to boost domestic economic growth, its ability to use the federal funds rate in doing so was "limited."

Analysts read her tone as dovish, saying the Fed won't be aggressive in raising rates, and that Yellen might have been pushing back on more hawkish comments from other Fed officials who recently said a rate hike might come as soon as next month. Analysts also interpreted the comments to mean Yellen ruled out negative interest rates that have been employed by some foreign central banks.

On supply, American Petroleum Institute late Tuesday reported a larger-than-expected build in U.S. commercial crude stockpiles and smaller-than-projected drawdowns in gasoline and distillate inventories.

Sources said API reported U.S. crude stockpiles surged 2.6 million bbl during the week-ended March 25, above calls for a 1.7 million bbl increase. The API also said gasoline stockpiles were drawn down 1.9 million bbl versus calls for a decline of 2.5 million bbl, and distillate stockpiles posted a 95,000 bbl drawdown, surpassing expectations for a 500,000 bbl stock draw.

The Energy Information Administration is scheduled to issue is weekly oil supply data at 10:30 AM ET.