NEW YORK (DTN) -- New York Mercantile Exchange oil futures rallied a day after posting near two-week lows, settling higher Tuesday afternoon on gains by equities and ahead of oil statistics that are expected to show gasoline and distillate supplies were drawn down during the last week of March.
"Oil bounced back after yesterday's (Monday's) losses as it followed the stock market," said analyst Phil Flynn at Price Futures. "Cooler heads have prevailed in the market and now we are waiting for API data that could tell us something about demand."
A survey showed expectations for total crude oil inventories in the United States to have held steady last week, but crude stocks at the Cushing depot in Oklahoma are seen to have increased 1.5 million bbl. Cushing data is closely watched since it's the delivery location for the West Texas Intermediate crude contract.
U.S. gasoline supplies are expected to have declined by 1.25 million bbl while distillate fuel stocks are estimated to have been drawn down by 2.5 million bbl during the week-ended March 30.
The American Petroleum Institute will release its oil report at 4:30 PM ET, while Energy Information Administration's Weekly Petroleum Status Report is due out at 10:30 AM ET Wednesday.
Some analysts see the correlative trade relationship between the oil market and equities continuing for some time, although they also expect the NYMEX spot-month WTI crude futures contract to remain within a $62 to $66 bbl trading range.
"Oil is still range-bound unless we see another spillover effect from the stock market," said Tom Bentz at ABN AMRO. "If equities break down, WTI could drop to high $50s, but I don't see that happening. We are still on a [major] uptrend."
NYMEX May WTI crude futures settled 50cts higher at $63.51 bbl, while the June Brent contract on the Intercontinental Exchange gained 48cts to $68.12 bbl at settlement. NYMEX May ULSD futures settled up 1.48cts at $1.9950 gallon, with May RBOB futures eking a 0.80cts gain to settle at $1.9741 gallon.
In equities trade, the Dow Jones Industrial Average rose nearly 300 points or 1.2% late afternoon ahead of the closing bell, while the S&P 500 Index was up 23 points or 1.0% and the Nasdaq 100 Index gained more than 45 points. Markets rebounded after Monday's selloff that was driven largely by fear of a potential trade war between the United States and China.
George Orwel can be reached at email@example.com
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