Oil Higher in Wednesday Trade

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures moved higher at the start of the regular session Wednesday morning after seesawing on either side of Tuesday's multi-month settlement highs in overnight trade, with a strengthening dollar restraining gains driven by upbeat U.S. economic data and expectations for lower oil supply globally in 2017.

The ongoing optimism is underpinned by expectations the Organization of the Petroleum Exporting Countries and 11 non-OPEC producing countries would comply with their pledges to cut oil production by a combined 1.758 million bpd during the first half of 2017 with the goal to return supply and demand into balance and push oil prices higher.

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The bullish sentiment was strengthened on Tuesday after the Conference Board said its U.S. consumer confidence index rose to 113.7 in December, the highest since August 2001, suggesting gasoline demand, which is 2.4% higher in 2016 through mid-December versus the comparable year-ago period and on pace to set a record per the Energy Information Administration, would remain strong in 2017. Strong oil demand joined by production cuts would quicken the pace in reducing the world's oversupply of oil.

In morning trade, NYMEX February West Texas Intermediate crude futures moved 27cts higher at $54.17 bbl and near a $54.29 fresh two-week high on the spot continuation chart. ICE February Brent crude futures rose 38cts to $56.47 bbl after inside trade.

NYMEX January ULSD futures were 1.19cts higher at $1.7113 gallon, near a $1.7128 fresh 1-1/2 year spot high. The January RBOB futures contract rallied 1.87cts to $1.6715 gallon, and traded at a fresh 16-month spot high.

In currency trade, the dollar index was up 0.4% Wednesday morning, having risen overnight to a one-week high after positive U.S. economic data reinforced expectations for a stronger economic growth, with a strong dollar bearish on oil prices.

An early survey of analysts by Schneider Electric projects data for the week-ended Dec. 23 would show a 2.2 million bbl crude oil stock draw and a 200,000 bbl distillate stock decline while gasoline stockpiles held unchanged.

The American Petroleum Institute will issue its report at 4:30 PM ET while the EIA is scheduled to release its data 11:00 AM ET Thursday.

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

(BAS)

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