Oil Settles Higher Tuesday

OLD BRIDGE, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and the front month Brent contract on the Intercontinental Exchange settled higher Tuesday, although pared an advance to one-week highs, while the September West Texas Intermediate futures contract expired at a seven-session high.

"Today's (Tuesday's) market pretty much looked like a squeeze play all day on the expectation for a bullish report from the APIs," said Dan Flynn, senior analyst with Chicago-based Price Futures Group.

The American Petroleum Institute will release supply data for the week-ended Aug. 17 at 4:30 PM ET, with the Energy Information Administration scheduled to issue their weekly data set 10:30 AM ET Wednesday.

"Last week's bearish [EIA] report was pretty much a mirage," he said, "with imports reported last week so far unaccounted for. So, we kind of think EIA will release a more bullish [crude] number."

EIA reported an unexpected and large 6.8 million bbl build in crude stocks that pushed inventory above the five-year average for the first time since early June, with a 1.083 million bpd jump in U.S. crude imports to 9.014 million bpd the catalyst for the sharp increase in supply.

Dominick Chirichella, EMI DTN Director of Risk Management, estimates a 1.8 million bbl decline in crude stocks occurred last week. He also expects a 2.0 million bbl draw from gasoline stocks and 1.2 million bbl build in distillate inventories.

Traders will also train their focus on the supply change at the Cushing tank farm in Oklahoma, where inventory increased to 23.4 million bbl during the week-ended Aug. 10 after 12 consecutive weekly drawdowns, EIA data shows. Cushing stocks had fallen to minimum operating levels estimated between 16.0 and 22.0 million bbl, which could trigger restrictions on liftings. Cushing serves as the delivery location for the WTI futures contract.

NYMEX September WTI futures expired up $0.92 at $67.35 bbl, easing off a $68.10 bbl high, with the October contract settling $0.42 higher at $65.84 bbl in the backwardated market. Concern over Cushing stocks and strong demand pull from U.S. refiners, which processed a 17.981 million bpd near record high amount of crude during the week-ended Aug. 10, have widened the calendar spreads.

ICE October Brent settled up $0.42 at a $72.63 bbl one-week high. NYMEX September RBOB futures settled up 0.28 cents at $2.0179 gallon, paring a gain to a $2.0386 one-week high. NYMEX September ULSD futures settled up 0.98 cents to $2.1236 gallon, trimming a move to a $2.1419 one-week high.

Brian Whary can be reached at brian.whary@dtn.com