Oil Futures Rally Ahead of EIA Data

Oil Futures Rally Ahead of EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures climbed at the start regular trade Thursday morning ahead of a weekly report by the U.S. Energy Information Administration that's expected to show stock draws for petroleum supplies for the last week of June and improving gasoline demand.

EIA's Weekly Petroleum Status Report for the week-ended June 30 is set for release at 11:00 AM ET, with the data delayed by a day as markets and federal offices were closed Tuesday for Independence Day holiday.

The futures complex was buoyed overnight by bullish data issued late Wednesday by the American Petroleum Institute showing steeper than expected stock draws of 5.8 million bbl for crude and 5.7 million bbl for gasoline for the week reviewed.

The API said crude stockpiles at the Cushing, Oklahoma, delivery point for NYMEX West Texas Intermediate crude futures tumbled 1.4 million bbl, twice estimated. Distillate supplies unexpectedly increased 400,000 bbl during the week reviewed, API showed, versus calls for a 500,000 bbl draw.

Despite the oil futures gains, market sentiment remains largely bearish in large part because any U.S. crude stock draws won't substantially dent global oversupply in the near term since production is increasing in Libya and Nigeria, analysts said.

Incremental barrels from Libya and Nigeria boosted total production by Organization of the Petroleum Exporting Countries in June, according to surveys early this week by Reuters and Bloomberg.

OPEC's Monthly Oil Market Report due on June 12 will provide a clue to the group's compliance with their 15-month agreement to cut output by 1.2 million bpd from January through March 2018. Russia and nine other non-OPEC producers also agreed to cut 558,000 bpd in coordination with OPEC.

The market will also scrutinize today's EIA report for the direction of U.S. crude oil production. EIA data for the week-ended June 23 showed production declined by 100,000 bpd to 9.25 million bpd, off a two-year high of 9.35 million bpd posted a week prior.

At 9:00 AM ET, NYMEX August WTI crude futures gained 75cts to $45.88 bbl while IntercontinentalExchange September Brent futures advanced 74cts to $48.53 bbl after inside trade. The Brent premium to WTI was little changed at $2.65 bbl.

August ULSD futures climbed 1.55cts to a $1.4940 gallon and August RBOB futures gained 2.31cts to $1.5255 after inside trade.

In currency trade, the dollar index eased, providing more support to oil futures.