Oil Up Early Wednesday

BURLINGTON, Vt. (DTN) -- Crude oil and oil product futures for June delivery on the New York Mercantile Exchange have broken back to the upside in formal session trading Wednesday with paper market bulls emboldened by the drawdown in U.S. oil supply reported late Tuesday by the American Petroleum Institute.

Wednesday's morning's rebound has powered June West Texas Intermediate futures up $1.71 to $70.70 bbl at the regular session open, following Tuesday's downturn that generated over 1-million contracts of volume in the June contract alone. July Brent futures were posting a $1.82 advance trading $76.67 bbl on the IntercontinentalExchange at press time.

ULSD futures for June NYMEX delivery were 5.21cts higher trading $2.2096 gallon at last check, and spot month RBOB futures were 4.31cts higher on the session printing $2.1545 gallon.

The release of oil statistics covering the May 4 period by the U.S. Energy Information Administration is scheduled for a 10:30 AM ET release and should define futures price direction over the short-term.

From a technical standpoint, futures market bears needed a close below $67.83 bbl to make a case for a market top, but sellers sent the June contract to a $67.63 Tuesday low then generated buying into the market close to a $69.06 settlement. The breach this morning above the $71.00 suggests room for a further advance into the $71.65-$73.30 range, according to futures specialist Brian LaRose at ICAP Technical Analysis.

LaRose sees this morning's June RBOB futures bounce setting up a test of resistance at $2.1830 followed by anticipated selling at $2.2135.

June ULSD could climb as high at $2.2700, LaRose believes, should it take out near term resistance at $2.2340.

G. Bud deGorgue can be reached at bud.degorgue@dtn.com