Oil Higher as Focus Stays on Supply

Oil Higher as Focus Stays on Supply

NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened higher on Tuesday morning as an oil disruption in Canada entered its second week. Futures gains have so far been capped by a stronger dollar and bearish comments out of Saudi Arabia.

The futures complex is expected to remain volatile in front of the release of the Energy Information Administration's Short Term Energy Outlook report for May at noon today.

At 9:00 AM ET, NYMEX June West Texas Intermediate crude futures were up 44cts at $43.88 bbl and July Brent futures on the IntercontinentalExchange 84cts higher at $44.47 bbl.

NYMEX June ULSD futures advanced 2.50cts to $1.3113 gallon while the NYMEX June RBOB futures contract advanced 1.94cts to $1.4621 gallon.

On Wall Street, equities were higher while the dollar gained 0.14% on recent comments by New York Fed President William Dudley that the Fed could get back to raising its benchmark interest rate later this year.

The Canadian wildfire continues to burn in the Alberta oil sands region but cooler weather kept it from some parts of Fort McMurray. The incident has prompted force majeure announcements by BP, Suncor and Phillips 66, with supply disruptions totaling 1.6 million bpd or 36% of total Canadian crude oil production. It could be several weeks before that supply is restarted, officials said, reducing for the time being the global oversupply.

Elsewhere, a Chevron oil platform in Nigeria was attacked by militants over the weekend that prompted a production shut-down, and the chief executive of Saudi Aramco, Amin Nasser, said his company will continue to boost output as it seeks to expand its market-share.

In the United States, domestic oil production is projected by Goldman Sachs to decline by 600,000 bpd in 2016.

Oil futures also came under pressure after market intelligence firm Genscape reported that crude inventories at Cushing, Oklahoma, which is the delivery point for NYMEX West Texas Intermediate, increased by 1.4 million bpd during the week-ended May 6.

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