Oil Futures Ease on Profit-Taking

OLD BRIDGE, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and front-month Brent crude on the Intercontinental Exchange edged lower Tuesday afternoon on profit-taking ahead of weekly supply data from the American Petroleum Institute, with the Brent contract reversing from a seven-week high, RBOB futures from a three-week high, and the ULSD contract from a three-month high.

"Volume was lighter today with the market doing some light profit taking while the market waits for direction from tonight's API report," said Phil Flynn, senior market analyst with Chicago-based Price Futures Group. "There's really very few news headlines out there today, so with the dollar weaker and the stock market creeping higher following yesterday's gains, that's providing some support for the market."

The U.S. dollar eased to a three-week low in index trading against a basket of currencies, sliding from a 13-month high reached on Aug. 15.

In late trading, the Dow Jones Industrial Average was up modestly above 26,000 following Monday's more than 250-point jump, S&P 500 Index up near 2,900 while the NASDAQ was at 8,035 following its first close above 8,000 on Monday in reaction to the U.S.-Mexico trade deal.

Market expectations for this afternoon's API report are for a 500,000- to 700,000-barrel (bbl) decline in U.S. commercial crude inventories for the week ended Aug. 24 following last week's larger-than-expected 5.8 million bbl decline. Distillate stocks are expected to rise between 1.4 million and 1.5 million bbl following four straight weeks of increases through Aug. 17 to 130.8 million bbl, while gasoline inventories are expected to have registered a build between 200,000 and 400,000 bbl. The market estimates U.S. refinery runs slipped by 0.4% to 0.6% for the week profiled after utilization was recorded at a 98.1% 20-year high during the two weeks ended Aug. 17.

The Energy Information Administration will publish its weekly report at 10:30 a.m. EDT Wednesday.

NYMEX October West Texas Intermediate crude settled $0.34 lower to $68.53 bbl. On ICE, October Brent reversed from a $76.97 bbl high to settle down $0.26 at $75.95 ahead of the contract's expiration Friday afternoon, with November delivery settling at a $0.34 premium to October at $76.29 bbl. Brent's forward curve shifts into backwardation with the expiration of October delivery, a bullish market structure.

NYMEX September ULSD futures settled down 0.35 cent at $2.2114 gallon after reversing from a $2.2335 high, with October ULSD futures down 0.36 cent at $2.2170 gallon.

NYMEX September RBOB futures reversed from a $2.1014 high to settle 1.09 cents lower to $2.0787 gallon, while the October contract settled down 1.16 cents at $1.9751 gallon.

NYMEX September ULSD and RBOB futures expire at Friday's close.

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