Oil Mixed in Wednesday Trade

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures opened regular trade mixed Wednesday morning, with the September West Texas Intermediate crude and ULSD contracts holding on to overnight gains in front of U.S. Energy Information Administration's weekly report that's expected to confirm another crude oil stock draw in the United States.

The EIA's Weekly Petroleum Status Report is due out at 10:30 AM ET.

WTI futures jumped after the American Petroleum Institute issued its weekly oil report late afternoon Tuesday, but prices pulled back from a seven-week high overnight into premarket trade Wednesday.

API reported crude oil inventories plunged 10.2 million bbl during the week-ended July 21, surpassing an expected 2.7 million bbl decline, and crude stockpiles at the Cushing, Okla., terminal fell 2.6 million bbl, more than an expected 600,000 bbl draw.

The API data on refined products were bearish however, which underpins the mixed premarket reaction by ULSD and RBOB futures. The data showed gasoline inventories surged 1.9 million bbl during the week reviewed, missing an expected draw down of 1.2 million bbl, and middle distillate fuel supply eased 110,000 bbl that fell short of a projected draw of 2.5 million bbl.

The API data showing a massive crude stock draw added to speculation that the long-awaited market rebalancing is underway. It also follows efforts early this week by the Organization of the Petroleum Exporting Countries to reduce the global oil supply overhang.

Saudi Arabia said Monday that they would export nearly 1.0 million bpd less in August than a year earlier. The United Arab Emirates plans to cut their production further in September while Nigeria agreed to cap its output at 1.8 million bpd once it reaches and stabilized there.

As well as EIA data, the market will be on the lookout for a decision this afternoon by the U.S. Federal Reserve on interest rates. The dollar index rebounded this morning from a 13-month low ahead of the Fed decision this afternoon following their two-day policy meeting.

At 9:00 AM ET, the September NYMEX West Texas Intermediate crude oil futures contract was 40cts higher at $48.29 bbl, off $48.66 seven-week spot high posted Tuesday, breaching resistance at $48.20.

September Brent crude futures on the IntercontinentalExchange climbed 30cts to $50.50 bbl, trading at a $2.21 bbl premium for WTI.

The NYMEX August ULSD futures contract edged up 0.78cts to a $1.5763 gallon open and August RBOB futures eased 0.40cts to $1.5922 gallon.

The August RBOB contract opened at a 2.29cts premium to the September contract, with backwardation signaling robust short-term demand for gasoline.

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