Oil Futures Open Higher

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures edged higher at the open of regular trade Tuesday morning as the dollar index slumped to an 11-month low and in front of weekly reports on oil supply and demand in the United States.

The American Petroleum Institute will issue its oil data for the week-ended July 14 at 4:30 p.m. EDT, after the closing bell for today's regular trade session, while the Energy Information Administration's report is scheduled for release at Wednesday morning.

A DTN survey showed the market expected U.S. crude oil inventories to have been drawn down by 3.0 million barrels (bbl) while gasoline supply is seen 1.0 million bbl higher and distillate fuel inventories are projected to have climbed by 1.5 million bbl during the week reviewed.

Recent EIA data showed domestic crude stockpiles steadily falling amid improved seasonal demand. Total crude oil inventories were drawn down to 495.3 million bbl as of the week-ended July 7, the lowest since the final week of January.

Still, concerns over global oil supply overhang remain and even U.S. production continues to climb, delaying the rate of market rebalancing.

The Organization of Petroleum Exporting Countries and 10 non-OPEC producers are supposed to be cutting 1.8 million barrels per day (bpd) as per their 15-month agreement, but there are now reports of a "leak" in the OPEC output cap.

OPEC member Ecuador, which pledged to cut its supply by 26,000 bpd and produced 528,000 bpd in May, said overnight that they won't be cutting their output any longer due to low prices, according to oil minister Carlos Perez.

OPEC also said last week that based on secondary sources its crude production increased by 393,500 bpd to 32.61 million bpd in June as Libya and Nigeria raised output.

Analysts noted that the futures complex remains range-bound despite the gains this morning.

In early trade, NYMEX August West Texas Intermediate crude futures were up 77 cents at $46.79 bbl. WTI's short-term technical trend is sideways to higher, with minor targets are between $47.02 and $48.20.

The IntercontinentalExchange September Brent crude futures contract was up 85 cents at $49.27 bbl.

The August ULSD futures contract was 2.40 cents higher at $1.5235 gallon while August RBOB futures gained 2.87 cents to $1.5751 gallon, trading at a 3.19-cent premium to the September contract. The RBOB backwardation is seen as a sign of improving seasonal demand for gasoline.

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