NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher this afternoon amid supply disruptions in Kuwait and elsewhere, a weakening dollar and lingering worries over geopolitical tensions in the Middle East.
"The Kuwait strike is [an] important [reason], but the fact is the bulls are back in control and it doesn't matter what the Saudis do," said Tom Bentz, head of energy derivatives at ABN AMRO. "The market is slowly rebalancing even though the Kuwaiti strike will be over in two weeks."
He added, "The market is focusing on the positives: Falling U.S. production, which is taking a lot of oil out of the market, a weaker dollar, and I also think the market is factoring in the tension between Iran and the Saudis."
NYMEX May West Texas Intermediate crude futures settled up $1.30 at $41.08 bbl, ahead of its expiration on Wednesday afternoon. The June contract rose $1.28 to $42.47 at settlement.
June Brent crude oil futures on the IntercontinentalExchange rose $1.12 to a $44.03 bbl settlement, off a three-day high of $44.50.
In products trade, NYMEX May ULSD futures rose 2.73cts to $1.2632 gallon at settlement, off a three-day high of $1.2813. NYMEX May RBOB futures spiked 4.34cts to $1.4799 gallon at settlement, off a two-day high of $1.4929.
On Wall Street, equities added to Monday's gains this afternoon while the dollar fell to a one-week low, with a weaker dollar bullish for oil futures.
The market's focus now turns to weekly U.S. oil supply data. Analysts surveyed by Schneider Electric shows the market expects U.S. crude oil inventories to have risen by an average of 1.7 million bbl during the week-ended April 15, with gasoline stocks seen down 1.3 million bbl and distillate fuel supplies seen up 200,000 bbl on the week.
The American Petroleum Institute will issue its oil report at 4:30 PM ET to paying clients. U.S. Energy Information Administration's weekly oil report is set for release at 10:30 AM ET Wednesday.
A strike by oil workers in Kuwait entered its third day, reducing supply that helped offset Sunday's failure by leading oil producers to freeze their production at January levels.
Thousands of workers in Kuwait, a member of the Organization of Petroleum Exporting Countries, are protesting public sector pay reforms, potentially reducing the country's output by about 60%. News reports said Kuwait's oil production is expected to be down to 1.0 million bpd from 2.772 million bpd in March, which is the figure given by OPEC in its recent oil market report, citing secondary sources.
Outages have also been reported in Nigeria, Iraq, and South Sudan, although the production loss in Kuwait is the most serious and could last two weeks unless the government moves fast to deal with the situation, Bloomberg News reported.
George Orwel can be reached at email@example.com
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