Oil Higher in Morning Trade

NEW YORK (DTN) -- Spot-month New York Mercantile Exchange oil futures were trading at fresh highs Tuesday morning, with RBOB rallying to a 19-month high ahead of the Energy Information Administration's weekly petroleum status report that's expected to show stock draws and higher demand.

Today's rally extended Tuesday's gains after the American Petroleum Institute late Tuesday reported stock draws in U.S. petroleum supplies that were closely aligned with market expectations, with crude stocks declining 1.83 million bbl, gasoline stockpiles down 2.6 million bbl and distillate fuel supplies dropping 2.1 million bbl during the week-ended March 31.

EIA's weekly report, set for release at 10:30 AM ET, is expected to detail stock draws of 2.0 million bbl each for crude oil, gasoline and distillates, and higher demand for both crude and refined products.

Analysts are bullish on gasoline demand, saying consumption of the fuel is expected to increase during the summer months and refinery downtime during spring maintenance season is seen tightening supply.

Also, a drop in crude imports would bolster claims the 1.8 million bpd in production cuts by the Organization of the Petroleum Exporting Countries and their 11 non-OPEC allies are starting to make an impact on global supply. OPEC Secretary General Mohammad Barkindo said early this week that there are signs the global supply-demand balance is tightening after three months of output cuts.

Oil futures are also supported by an outage at the 200,000 bpd North Sea Buzzard field that contributes supply along with the Forties field for Brent crude. Production was halted on Tuesday for unplanned repair work.

At 9:00 AM ET, May NYMEX WTI futures rose 77cts to $51.80 bbl, plowing through initial resistance at $51.13 to a $51.80 one-month high on the spot continuation chart. IntercontinentalExchange June Brent crude futures rallied 76cts to $54.93 bbl, near a $54.95 one-month spot high.

NYMEX May ULSD futures climbed 2.46cts to $1.6169 gallon, near a one-month high of $1.6181, and NYMEX May RBOB futures advanced 1.35cts to $1.7352 gallon, near a 19-month spot high of $1.7374.

On the economic front, ADP jobs report released this morning was bullish, as it showed 263,000 jobs were added to the economy last month that was more than an expected 185,000. This sets up another potentially bullish U.S. Labor Department's payroll report for March due out on Friday. A higher open for equities this morning reflects investor optimism and risk-off trade.

In addition, the U.S. Federal Reserve will release minutes of its March meeting at 2:00 PM ET that could impact the U.S. dollar, which is slightly stronger near a three-week high.

The data suggests a strong economy, with a growing economy supporting oil demand growth.

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