NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Thursday after shaking off early weakness, supported by a recovery in equities and tightening supply in front of next week's summit by the Organization of the Petroleum Exporting Countries.
"The oil market rallied in reaction to the stock market, but we are turning our attention now to the OPEC meeting next week, plus demand is increasing as refineries begin to ramp up utilization," said Andy Lipow, president of Lipow Oil Associates in Houston.
On Wall Street, U.S. equities recovered after posting the biggest one-day loss in eight months on Wednesday as upbeat U.S. jobless claims data soothed investor concerns unnerved by political uncertainties in the United States and Brazil.
The stock market is a barometer of investor confidence and appetite for risk. It's been a while since oil and equities traded in tandem, so this may be an early sign of correlation trade returning between the commodities and financial markets, said analysts.
On the fundamentals, the Energy Information Administration's latest report issued Wednesday showed stock draws for crude oil and refined products, with demand also higher for the week-ended May 12.
EIA's Weekly Petroleum Status Report showed total crude oil stocks at 520.8 million barrels (bbl) after a 1.7 million bbl draw that narrowed the year-over-year surplus to 2.2% for last week. Refinery crude oil inputs were 363,000 barrels per day (bpd) higher at 17.1 million bpd, as refineries boosted runs by 1.9% to 93.5% of their operable capacity last week.
The market awaits the weekly rig count report to be issued Friday by oil services firm Baker Hughes, Inc.
Traders were encouraged by expectations OPEC and 11 non-OPEC producers who support their supply policy will meet on May 25 to approve a nine-month extension of the current production cuts of nearly 1.8 million bpd.
NYMEX June WTI crude futures settled 28 cents higher at $49.35 bbl, edging off a $49.60 three-day high, while July Brent crude futures gained 30 cents to $52.51 bbl on the IntercontinentalExchange, ending near a $52.74 better-than three-week high on the spot continuation chart. The Brent premium to WTI was little changed at a $3.16 bbl better than five-week high.
NYMEX June ULSD futures settled 1.18 cents higher at $1.5453 gallon, near a $1.5536 three-week spot high. June RBOB futures eked a 0.36-cent gain to a $1.6063 gallon settlement, reversing off a $1.5597 four-day low.
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