WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude futures moved fractionally higher early Tuesday, supported by another expected draw in U.S. commercial crude inventories as well as sanctions against Venezuela, while China signaled currency stabilization, easing trade tensions with the United States.
Near 9 a.m. ET, September West Texas Intermediate crude futures added 9 cents to $54.79 per barrel (bbl) while ICE October Brent gained 23 cents to $60.04 bbl.
September RBOB futures rose 0.88 cents to $1.7268 gallon and September NYMEX ULSD future traded 0.85 cents higher at $1.8440 gallon.
Oil futures turned higher Tuesday morning after U.S. President Donald Trump imposed a total economic embargo against Venezuela, significantly expanding existing sanctions on the its government in Caracas. According to the U.S. Department of Commerce, the embargo freezes all assets of Venezuelan state officials and bans all financial transactions with the exception only of humanitarian aid. Analysts believe the latest executive order is a swipe at China and Russia that have continuously supported Nicolas Maduro's regime through financial and military assistance over the years. The move also comes after the U.S. government officially designated China as a currency manipulator after Beijing depressed its national currency, the yuan, to the lowest in a decade against the U.S. dollar. President Trump said Monday, "This is a major violation which will greatly weaken China over time." Following China's currency depreciation, U.S. equities fell nearly 3% amid the worst sell-off of the year and oil markets suffered heavy losses with Brent crude settling below $60 a bbl. West Texas Intermediate ended Monday 1.4% lower, suffering only half the loss of Brent crude amid support from a weakening dollar and expectations of another draw in domestic crude inventories last week.
Overnight, China's Central Bank lifted the yuan's official reference point above the key 7 yuan-to-the-dollar point, stabilizing its national currency against U.S. dollar. U.S. stock indexes are set for rebound Tuesday morning in response to the reports from China. The U.S. greenback edged 0.04% higher early Tuesday morning to 97.345 in index trading.
Looking ahead, market participants will also pay close attention to crude inventories in the United States after stockpiles were drawn for seven consecutive weeks. Analysts expect U.S. commercial crude supplies to erode further, falling 3.8 million bbl in the week ended Aug. 2, while gasoline stocks are seen down 1.4 million bbl and distillate inventories down 450,000 bbl. The American Petroleum Institute will publish preliminary data Tuesday afternoon at 4:30 p.m. ET and official government statistics from U.S. Energy Information Administration are set for release Wednesday midmorning..
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