NYMEX Oil Futures Up Early

NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved higher early Tuesday. This came following Monday's selloff, advancing alongside equities after major stock indices suffered heavy losses day prior and ahead of weekly supply reports expected to show inventory drawdowns for gasoline and distillates during the final week of March.

Equity markets tumbled Monday, dragging down commodities, with investors rattled by fear of a potential trade war after China slapped retaliatory tariffs on 128 U.S. goods worth $3 billion. Monday's selloff in equities was also fueled by concern over the technology sector, with those fears fanned after President Donald Trump attacked online retailer Amazon. Major equity indices moved higher in early trade, recapturing a modest portion of Monday's losses.

Those worries spilled into oil futures trading, with the market dropping back on concern that a trade war could slow economic growth and demand for fuel. Demand for oil products are running well ahead of the year ago pace, underpinning oil futures values in the first quarter.

An analysis of data from the Energy Information Administration by Barclays Capital found cold weather early in the year boosted demand for oil products. Barclays said more than half of the 1.2 million bpd annual growth in petroleum demand in January came from higher distillate demand, with half of that increase generated by heating demand along the East Coast PADD 1.

Market expectations call for distillate stocks to have been drawn down 2.5 million bbl during the week-ended March 30, with gasoline inventory seen down 1.25 million bbl. Expectations also call for U.S. commercial crude stocks to have held steady during the week reviewed at 429.95 million bbl, which is seen bullish since refineries are undergoing seasonal maintenance. Refinery runs are strong however, with analysts projecting a 1.0% boost to 93.3% of national operational capacity.

Analysts expect crude stocks at Cushing, Oklahoma, the delivery location for the NYMEX WTI futures contract, to have risen 1.5 million bbl during the week-ended March 30. On Monday, data collection company Genscape reported a 3.6 million bbl supply build at Cushing.

The American Petroleum Institute will release its assessment of weekly supply changes at 4:30 PM ET, while the EIA will issue its weekly oil data at 10:30 AM ET Wednesday.

In early trade, NYMEX May West Texas Intermediate crude futures climbed 36cts to $63.37 bbl. June Brent on the Intercontinental Exchange edged up 35cts to $67.99 bbl. NYMEX May ULSD futures added 0.77cts to $1.9802 gallon, with May RBOB futures gaining 1.76cts to $1.9837 gallon.

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