NEW YORK (DTN) -- New York Mercantile Exchange oil futures snapped a two-day selloff and advanced this morning on a weaker dollar and bargain hunting.
The rebound for futures was also part of broader market stability after slumping Friday and Monday in the aftermath of Thursday's, June 23, decision by the United Kingdom to leave the European Union.
The exact impact of the U.K. decision on the global economy remains to be seen, but is expected to have a minimal effect on the oil market that has found support in the tightening oil supply disposition and expectations for strong demand at least during the summer months.
The prospect for stronger demand was bolstered by a new report this morning from the U.S. Commerce Department revising up first quarter gross domestic product annualized growth to 1.1% from 0.8% reported last month, and a 5.4% rise in April home sales across 20 major U.S. cities, according to the Case-Shiller index.
The futures complex was further boosted by reports of an impending workers' strike in Norway that might disrupt oil production in the North Sea starting this coming weekend.
At 9:00 a.m. EDT, NYMEX August West Texas Intermediate crude oil futures were up $1.43, or 3.1%, at $47.76 per barrel (bbl) and August Brent on the IntercontinentalExchange rose $1.39, or 3.0%, to a $48.55 bbl open.
In products trade, NYMEX July ULSD futures gained 2.56 cents, or 2.6%, to $1.4658 gallon at the open. The July RBOB futures climbed 3.84 cents, or 2.6%, to $1.5151 gallon open.
On Wall Street, U.S. stock indices were recovering on risk-on trade with the Dow Jones Industrial Average up 225 points Tuesday morning, rebounding after a combined loss of nearly 900 points on Friday and Monday.
In currency trade, the British pound sterling rose 1.4% this morning after plunging to 31-year low following the Brexit vote. The U.S. dollar dropped from a three-month high versus six major currencies including the euro.
Analysts said that while the global economy could experience a knock-on effect from the Brexit, the impact on demand for energy would likely be limited.
On Monday, AAA projected nearly 43 million Americans would travel this Independence Day weekend, five million more travelers than Memorial Day, and the highest July 4th travel volume on record. More than 36 million or 84% of holiday travelers will drive to their destinations, an increase of 1.2% over last year.
An early survey of analysts by DTN showed crude oil inventories in the United States fell in the week-ended June 24 while domestic gasoline and distillate stockpiles are projected to have increased.
The American Petroleum Institute is scheduled to issue its weekly report this afternoon at 4:30 p.m. EDT, and the Energy Information Administration's more definitive report is set for release at 10:30 a.m. EDT Wednesday.
There is a threat of a strike by Norwegian oil and gas workers beginning this weekend, which if not resolved could limit supply from the key North Sea oil producer. Workers are demanding a new wage deal before a July 1 deadline, the Wall Street Journal reported.
A strike in Norway could provide a boost to Brent futures, with Brent crude fed by three separate crude oil streams from North Sea oilfields. It would add to a number of production outages in oil-producing countries including Nigeria.
George Orwel can be reached at email@example.com
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