NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Tuesday afternoon with nearby delivered RBOB contract rallying to a one-month high in front of what's expected to be a bullish report from the American Petroleum Institute this afternoon showing stock draws for crude oil, gasoline and distillates in the United States amid improving demand.
Oil futures also pushed higher on the closure of the 200,000-barrel-per-day (bpd) North Sea Buzzard field, the largest contributor of supply along with the Forties for Brent crude, with Brent futures trading on the IntercontinentalExchange. Production was stopped on Tuesday for unplanned repair work and is expected to be down for a day or two.
"The North Sea production outage is supporting the oil complex along with domestic supply data," said analyst Phil Flynn at Price Futures in Chicago.
At settlement, May NYMEX WTI futures rose 79 cents at $51.03 per barrel (bbl), testing resistance at $51.13, while ICE June Brent crude oil futures rallied $1.05 to settle at $54.17 bbl and near a $54.26 one-month high on the spot continuation chart. The Brent premium to WTI increased 26 cents to a $3.14 bbl two-week high.
NYMEX May ULSD futures climbed 2.89 cents to $1.5923 gallon, edging off a one-month high of $1.5985, and NYMEX May RBOB futures advanced 2.80 cents to a $1.7217 gallon settlement, settling near a one-month high of $1.7243.
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"I've been saying for a while that the gasoline market is what's mostly driving the oil complex because demand is good and supply is falling. People are now realizing that we are not all that oversupplied," said Flynn. "The market will be tightening soon as refiners go for maintenance."
The RBOB contract shifted to a backwardated price structure with the March 31 expiration of the April contract reflecting the seasonal transition to the summer's market when gasoline demand often peaks.
On weekly data, the market anticipates declines of 2.0 million bbl each for domestic crude oil, gasoline and distillate fuel inventories to have occurred during the final week of March, and for crude supply at the Cushing terminal in Oklahoma to have declined by 500,000 bbl.
The API report is due out this afternoon with weekly supply data from the Energy Information Administration set for release at 10:30 AM ET Wednesday.
In addition, reports out this week indicate oil supply in the Caribbean and held in floating storage have declined that suggest, according to Tim Evans at Citi Futures, that the global market is rebalancing on the back of production cuts led by the Organization of the Petroleum Exporting Countries.
"While the talk is certainly supportive, the data behind it is sketchy, with the anonymous trade sources behind the reports not necessarily disinterested parties," said Evans.
On Sunday, OPEC Secretary General Mohammad Barkindo said there are signs the global supply-demand balance is tightening following three months of production cuts by OPEC and 11 non-OPEC oil producing countries.
Some OPEC members have called for the nearly 1.8 million bpd in total production cuts to be extended for an additional six months after the current six-month agreement expires on June 30. OPEC meets in Vienna on May 25.
George Orwel can be reached at email@example.com
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