WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange surged in overnight trade, supported by bullish weekly supply data released late Tuesday, while rallying equities and ongoing U.S.-Iran tensions offered additional support to the market.
NYMEX August West Texas Intermediate was up $1.05 near $58.95 per barrel (bbl) at 9 a.m. ET, with the August Brent contract on ICE $0.80 higher at $65.85 bbl. NYMEX July ULSD futures were 2.3 cents higher near $1.9465 gallon, with the July RBOB contract rallying 5.1 cents to near $1.9280 gallon.
The American Petroleum Institute reported a much larger than expected 7.547 million bbl draw in domestic crude inventories during the week ended June 21, surpassing market expectations for a drop of 2.8 million bbl. In refined products, industry data was mixed showing gasoline inventories tumbled 3.172 million bbl, nearly three times an expected 1.1 million bbl draw, while distillate stocks added 155,000 bbl versus an expected 1.1 million bbl decrease.
Market participants await official figures from the Energy Information Administration set for release at 10:30 a.m. ET.
Oil futures continue to draw support from simmering geopolitical tensions in the Middle East, where a U.S. military strike against Iran was called off minutes short of implementation last week. Iran's Atomic Energy Organization said on Wednesday it would further accelerate enrichment of uranium after the country's leadership declared the path to peaceful negotiations with Washington is permanently closed. Trump administration warned Tehran that an attack on "anything American" would be met with overwhelming force, stocking inventory fears that tensions could quickly escalate into a full-blown military confrontation in the heart of oil producing region.
Separately, Philadelphia Energy Solutions is expected to shut down 335,000 barrels per day (bpd) Girard Point and Point Breeze refineries in Philadelphia following last week's massive fire, according to Reuters. The refinery complex is the largest on the East Coast and is a major supplier for the New York/New Jersey gasoline market. NYMEX July RBOB futures traded 6 cents higher near $1.9365 gallon in early trade.
In financial markets, U.S. stock indexes surged Wednesday morning after Treasury Secretary Steve Mnuchin said "there is a path to a complete trade deal with China," which is 90% complete. Dow Jones Industrial Average futures indicate a gain of 116 points at the open for the index, while S&P 500 trading was higher as well. U.S. President Donald J. Trump is scheduled to meet China's Xi Jinping at the G-20 summit in Osaka, Japan, later this week to discuss a bilateral trade agreement.
Liubov Georges can be reached at email@example.com
Copyright 2019 DTN/The Progressive Farmer. All rights reserved.