CRANBURY, N.J. (DTN) -- Oil futures with nearest delivery traded on the New York Mercantile Exchange and October Brent crude futures on the IntercontinentalExchange settled shallowly mixed Tuesday afternoon, pulling back from three-week lows ahead of weekly supply data to be released this afternoon by the American Petroleum Institute.
The mixed settlements follow relatively tight trade ranges for the contracts, especially West Texas Intermediate and Brent, after support was tested. The modest end-day changes for the contracts also come in front of weekly supply reports to be released this afternoon from API and at 10:30 a.m. EDT Wednesday from the Energy Information Administration that are seen showing across the board supply drawdowns.
Moreover, WTI and Brent crude futures remain in tight trade ranges as sentiment shifts between bearish and bullish chiefly based on the latest data on the oil production rates by the Organization of the Petroleum Exporting Countries and U.S. shale oil producers. A jump in OPEC crude production in July despite 1.2 million barrels per day (bpd) in agreed to output cuts reported late last week and a projection by the EIA released Monday that U.S. shale oil production would again increase in September soured market sentiment.
NYMEX WTI futures were also pressured by a strengthening U.S. dollar, which rallied to a three-week high ahead of Wednesday's release of minutes from the Federal Open Market Committee's July meeting. The greenback was supported by a 0.6% jump in U.S. retail sales in July reported this morning by the Commerce Department, with the monthly increase the greatest since December's 0.9% monthly gain.
NYMEX September WTI futures settled down 4 cents at $47.55 per barrel (bbl), testing retracement support at $47.22 bbl with a $47.02 three-week low. ICE October Brent futures settled up 7 cents at $50.80, testing psychological support at $50 bbl with a trade at a $50.02 three-week spot low.
NYMEX September ULSD futures settled down 0.61 cent at $1.5996 gallon after trimming a decline to a $1.5829 three-week low on the spot continuous chart. September ULSD futures broke below initial support at $1.6004 gallon in overnight trade, with retracement support marked at $1.5533 gallon.
NYMEX September RBOB futures settled up 0.28 cent at $1.5795 after reversing from a $1.5657 three-week low on the spot continuous chart, with retracement support found at $1.5528 gallon.
RBOB futures are in seasonal backwardation through January 2018 delivery, with strong summer gasoline demand set to fade following Labor Day. Averaging 9.227 million bpd this year, implied gasoline demand is trailing the year-ago pace by 213,000 bpd or 2.3%.
ULSD futures are in seasonal contango, although the calendar spreads have narrowed amid strong demand and early expectations for a cold winter in the Northeast -- the world's heating oil capital. EIA shows implied distillate demand cumulatively this year through Aug. 4 at 4.079 million bpd, up 325,000 bpd, or 8.7%, against the comparable year-ago period. Nearest delivered ULSD futures moved into a premium position against RBOB futures in early August.
The market now awaits the 4:30 p.m. EDT API release of supply data for the week-ended Friday, Aug. 11.
Analysts expect domestic commercial crude inventory to have been drawn down for the eighth week last week, seen 3.7 million bbl lower. Gasoline inventory is expected to have declined by 800,000 bbl and distillate fuel by 1.2 million bbl. The U.S. refinery run rate is estimated to have eased 0.5% to 95.8% of capacity for the week reviewed.
Brian L. Milne can be reached at firstname.lastname@example.org
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