NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were slightly higher Wednesday morning ahead of the Energy Information Administration's Weekly Petroleum Status Report that's expected to show crude oil and refined oil product supplies in the United States were drawn down last week.
A weakening U.S. dollar also supported oil futures gains in early trade, although the upside for the oil complex was limited by higher domestic crude production.
The WPSR for the week-ended May 12 will be released at 10:30 AM ET and a survey of analysts detailed market expectations of a 2.4 million bbl stock draw for crude oil and declines of 1.4 million bbl for gasoline and distillate fuels supplies. Late Tuesday, the American Petroleum Institute said crude inventories rose last week by 882,000 bbl, with gasoline stocks drawn down by 1.8 million bbl and distillate supplies up 1.8 million bbl.
Traders will scrutinize U.S. crude oil production data that has shown relentless increases over the past year.
EIA data for the week-ended May 5 showed domestic crude production rose by 21,000 bpd to a 20-month high of 9.314 million bpd, with rising U.S. supply undermining the goal of the Organization of the Petroleum Exporting Countries to reduce a global oil surplus now in its third year.
OPEC and their 11 non-OPEC allies are set to meet on May 25 to approve an initiative fronted by Saudi Arabia and Russia to extend production cuts of nearly 1.8 million bpd beyond their June 30 expiration.
Early Tuesday, the International Energy Agency's Oil Market Report had a mixed outlook on fundamentals, raising supply by non-OPEC producers. The IEA report said oil market rebalancing may be accelerating, but added that global supply won't be drawn down to their five-year average this year.
"That's mixed messaging by IEA," said analyst Phil Flynn of Price Futures Group.
Oil futures were supported however by a weaker dollar, with the dollar index down to a fresh six-month low versus its global rivals including the yen and the euro amid souring investor sentiment with economic data and political news headlines this week, said analysts. Oil futures and the dollar often trade inverse to each other.
At 9:00 AM ET, NYMEX June WTI crude oil futures gained 28cts to $48.94 bbl, and could test resistance at $49.50. The WTI contract remains in contango through the rest of this year before flipping into backwardation during the first quarter of 2018.
July Brent crude futures on the IntercontinentalExchange climbed 40cts to a $52.05 bbl, with the Brent premium to WTI up 12cts to a $3.11 bbl five-week high. Resistance for the contract is holding at $52.50.
In products trade, June ULSD futures rose 1.20cts to $1.5284 gallon. June RBOB futures gained 0.63cts to $1.6106 gallon in early trade, with the short-term trend higher and resistance at $1.6105 being tested.
George Orwel can be reached at email@example.com
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