Oil Continues to Rally Tuesday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures continued to rally at the start of regular trade Tuesday morning on a weaker dollar, expectation U.S. gasoline stocks were drawn down last week, and speculation the Organization of Petroleum Exporting Countries and non-OPEC would take action to stabilize oil prices when they meet late next month.

The dollar fell to a seven-week low versus a basket of six major currencies on growing confidence the Federal Reserve won't raise interest rates this year, analysts said, as fresh economic data showed the consumer price index unchanged in July.

An early survey of analysts showed gasoline stocks for the week-ended Aug. 12 are expected to have been drawn down by 3.0 million bbl while the forecast for crude and distillates were mixed.

Late last week, Saudi Arabia's Energy Minister, Khalid al-Falih, said OPEC would hold informal talks to discuss freezing or cutting oil production, adding substance to similar comments by OPEC President Mohammad bin Saleh al-Sada earlier in the week.

The informal talks are be held alongside the International Energy Forum conference scheduled for Sept. 26-28 in Algeria, and come in front of OPEC's regularly scheduled biannual meeting on Nov. 30.

Adding to the speculation that OPEC would act and also work with non-OPEC producers was comments from Russian Energy Minister Alexander Novak, who told a Saudi newspaper on Monday that he was amenable to working with OPEC on a plan to stabilize the market.

Russia, Saudi Arabia and the United States are the world's three largest oil producers.

At last look, NYMEX September West Texas Intermediate crude futures were up 24cts at $45.98 bbl, paring an advance to a $46.21 one-month spot high. October Brent on IntercontinentalExchange advanced 16cts to $48.51 bbl, edging off a $48.81 five-week spot high.

In products trade, NYMEX September ULSD futures edged up 0.43cts to $1.4542 gallon, trimming an advance to a $1.4619 five-week spot high. NYMEX September RBOB futures moved up 0.87cts to $1.4094 gallon, paring a gain to a one-month spot high of $1.4163.

The market will position in front of weekly supply reports due out at 4:30 PM ET from the American Petroleum Institute and at 10:30 AM ET Wednesday from the Energy Information Administration will release its data.

On Friday (8/12), oil services firm Bakers Hughes reported the number of rigs drilling for oil and gas in the U.S. increased for a seventh straight week, with the number of active oil rigs up 15 at 396.

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