Oil Futures Extend Gains

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures opened higher on Thursday morning, rallying for the third straight day to multi-week highs on positive Energy Information Administration data that showed significant stock draws for petroleum inventories in the United States.

The federal agency said on Wednesday that U.S. crude stocks tumbled 4.7 million bbl to a six-month low of 490.6 million bbl last week. Also down were gasoline stocks that fell 4.4 million bbl and distillate stocks that registered a 2.1 million bbl decline. Products stocks are now at deficits versus same period last year the could prompt extended buying in paper markets.

However, the futures rally could be short-lived, said analysts, citing EIA data showing domestic crude production rose again last week, up 32,000 bbl to a fresh two-year high of 9.429 million bbl, and gasoline demand was down both on a weekly basis and versus last year.

Overseas, supply continues to rise in Libya and Nigeria, while Iraq plans to increase its output by the end of this year despite being part of an ongoing OPEC agreement to cut output. On Tuesday, Ecuador said for financial reasons it could not hold to its pledge to cut production by 26,000 bpd.

The market is still enjoying short-term technical support after the August West Texas Intermediate crude futures contract breached initial resistance at $47.02, with the next target at $48.20. On the negative side, crude oil and product futures are approaching overbought conditions.

In early trade, August WTI futures were 26cts higher at $47.38 bbl, off a $47.46 six-week high and ahead of its expiration at today's formal session close. The September contract was up 26cts trading $47.70 bbl at press time.

The September Brent crude futures contract on ICE platform added 30cts to $50.00 bbl, off a six-week spot high of $50.14, and trading at a $2.69 premium to WTI

The August ULSD futures contract rose 1.65cts to $1.5679 gallon, down from a seven-week high at $1.5703. The August RBOB futures contract was 1.42cts higher at last check printing $1.6111 gallon, and below a $1.6315 seven-week high.