CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery notched modest gains. Brent crude on the Intercontinental Exchange moved to a three-week high early Wednesday ,ahead of weekly industry data due out midmorning, with a tightening global supply-demand disposition continuing to lend upside support for oil futures early in the fourth quarter.
The early morning gains come ahead of U.S. oil supply data from the Energy Information Administration scheduled for release at 10:30 AM ET, with the market expecting across the board inventory drawdowns for commercial crude and oil products to have occurred during the week-ended Oct. 13.
Late Tuesday, the American Petroleum Institute released its weekly study that contrasted with expectations, although the Washington, D.C. trade group did report a large 7.13 million bbl draw from commercial crude stocks, although shy of the market's anticipated 7.75 million bbl supply decline. API also reported gasoline inventory increased 1.94 million bbl and that distillates stockpiles registered a 1.64 million bbl build during the week-ended Oct. 13.
Near 10 AM ET, NYMEX November ULSD futures were up fractionally near $1.8115 gallon and November RBOB futures were holding a 0.65cts gain near $1.6365 gallon following a 1.32cts advance Tuesday.
NYMEX November West Texas Intermediate futures were up 30cts near $52.20 bbl ahead of the contract's expiration at the close of trade on Friday (10/20), with the December contract moving in tandem, holding a modest 20cts premium to the expiring November contract.
ICE December Brent crude futures were 42cts higher at $58.30 bbl, trading near a $58.54 three-week high on the spot continuous chart. Brent's premium to WTI is again over $6 bbl, as geopolitical tensions bolster the international crude price marker against U.S. crude values. The widening Brent premium, with the spread first blowing out to a better than two-year high in late August, also reflects the tightening global oil market as production cuts by the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producing nations whittles down a global inventory surplus.
Easing tension in Iraq, where Iraqi forces pushed Kurdish Peshmerga forces out of oil fields in the north earlier this week, had rallied oil futures. Tension between Iraqi forces and the Kurds appear to be easing, with Iraqi Prime Minister Haider al-Abadi having said there will be no civil war.
The market had feared violence between Kurds, who voted for independence late September, and Iraqi forces taking command from Baghdad could disrupt oil supply from the OPEC member. The oil fields where Peshmerga forces were dislodged from have a production rate of 600,000 bpd.
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