NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled at fresh highs Thursday afternoon, with West Texas Intermediate and ULSD futures rallying for the fourth straight session and the RBOB contract for the third consecutive session amid positive sentiment spurred primarily by ongoing weekly drawdowns from U.S. crude oil stocks, improving seasonal demand and technical support.
The market is now looking ahead to U.S. oil rig count data due out Friday afternoon from Houston-based oil services firm Baker Hughes, Inc., for clues on whether domestic crude oil production growth is slowing down, said analysts.
"Nobody wants to get short and the rig-count data tomorrow is the key thing to watch because we are looking for evidence oil shale producers are pulling back," said analyst Phil Flynn at Price Futures Group.
Others pointed to the products market and technical indicators in driving today's gains.
"Gasoline is the story to watch, not crude, and so the trend is up seasonally, although how long this rally will last will depend on whether RBOB can get over $1.70 resistance," said technical analyst Brian LaRose at ICAP in Jersey City, N.J.
"RBOB still has a 20 cents upside left to get to peak level, having climbed 25 cents off lows, so potentially we can get to $1.85 by late August to early September once we get over target hurdles at $1.615 to $1.635 and then at $1.70. The direction for WTI will be dictated by gasoline. Once we get through the $49.30 hurdle, there will be an opportunity to get north of $50 ... to $52 resistance, although I should warn that we'll have difficulty getting there."
The futures market seesawed between modest gains and losses in early trade before making a decisive move higher during afternoon trade, underpinned by bullish data from the Energy Information Administration and talk of further reduction to oil exports by three Arab Gulf countries -- Kuwait, Saudi Arabia and the United Arab Emirates -- that are members of the Organization of the Petroleum Exporting Countries.
EIA on Wednesday reported domestic crude oil inventory dropped to the lowest level since the first week of the year. The data showed U.S. crude stocks fell 7.2 million barrels (bbl) during the week-ended July 21 to 483.4 million bbl, erasing a year-over-year surplus. Domestic crude production eased 19,000 barrels per day (bpd) to 9.41 million bpd, while up 895,000 year-on-year.
Crude inputs, a proxy for demand, rose 166,000 bpd to 17.3 million bpd last week, the highest input rate since the week-ended May 26. Implied gasoline demand rose 229,000 bpd to 9.821 million bpd last week, shy of the weekly record of 9.822 million bpd achieved in late May.
The September WTI crude oil futures contract settled 29 cents higher at $49.04 bbl, off a $49.24 eight-week spot high. September Brent crude oil futures on the ICE platform gained 52 cents to a $51.49 bbl settlement and near a $51.64 eight-week spot high.
The Brent contract closed at a $2.45 bbl premium to WTI, gaining 23 cents from day prior.
The August ULSD futures contract was little changed, settling 0.79 cent higher at $1.6032 gallon, edging off a fresh nine-week spot high of $1.6102. The August RBOB futures contract rallied 2.73 cents to $1.6446 gallon at settlement, easing off a $1.6488 nine-week spot high. The August RBOB contract ended at a 2.49 cents premium to the September contract.
George Orwel can be reached at firstname.lastname@example.org
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