Oil Futures Higher Ahead of EIA Report

Oil Futures Higher Ahead of EIA Report

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were holding on to modest gains at the open of regular trade Wednesday morning ahead of weekly data from the U.S. Energy Information Administration that's expected to show draws for crude and gasoline and a modest build for distillate fuel supplies in the United States.

The American Petroleum Institute's report issued late Tuesday showed bigger-than-expected weekly stock draws for U.S. crude oil and finished oil products, prompting a rebound across the oil futures complex.

EIA is scheduled to release its corresponding weekly oil report at 10:30 AM ET.

The market has been volatile over the past week due to an uncertain political environment linked to Britain's referendum over its European Union membership, with the futures complex rising Monday before crude and ultra-low sulfur diesel dipped on Tuesday on profit-taking.

The speculative plays should continue today ahead of Thursday's referendum, but the API report has generated a perceptive change in short-term supply and demand fundamentals.

At 9:00 AM ET, NYMEX August West Texas Intermediate crude futures edged up 19cts to a $50.04 bbl open. The August Brent crude contract on the IntercontinentalExchange was 19cts higher at $50.81 bbl.

In products trade, NYMEX July ULSD futures nudged up 0.95cts to $1.5262 gallon while July RBOB futures advanced 1.00cts to $1.6029 gallon at the open.

API reported that domestic commercial crude oil inventories declined 5.2 million bbl in the week-ended June 17, surpassing an expected 1.7 million bbl draw. The API report prompted short-covering in the oil futures complex overnight.

API also said the nation's gasoline inventories were drawn down by 1.5 million bbl during the week profiled, surpassing an expected 300,000 bbl draw, while distillate stocks fell 1.7 million bbl versus forecast for a 200,000 bbl stock build.

On Wall Street, equities were higher this morning while the dollar was lower versus a basket of six currencies including the sterling pound.

This comes as fresh polls in Britain show Thursday's vote will be a tossup between voters who want the country to remain in the EU and those who would prefer an exit from the bloc. Most analysts believe Britain will choose to stay because of concern over economic risks.

Federal Reserve Chair Janet Yellen told the Senate Banking Committee Tuesday that a Brexit was a risk to the economy, and said she would tread carefully as she gauges when to lift interest rates. She's expected to renew those comments today in a testimony before the House Financial Services Committee.