WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude posted modest gains for the third consecutive session on Tuesday, amid expectations for a draw in U.S. commercial crude inventories. A weaker dollar lent additional price support.
After back-and-forth trade for most of the session, NYMEX September West Texas Intermediate futures expired $0.13 higher at $56.21 barrel (bbl) while the October WTI contract eased a penny to a $56.13 bbl settlement. ICE October Brent futures settled up $0.29 at $60.02 bbl. The spread between the October U.S. benchmark and October Brent narrowed to $3.90 this afternoon.
NYMEX September ULSD futures settled 2.12 cents higher at $1.8543 gallon, and September RBOB contract advanced 1.67 cents at $1.6811 gallon, with both contracts extending gains from Monday's session.
The U.S. dollar fell 0.18% in afternoon index trade to 98.045, reversing from a 2-1/2 week high. A weaker greenback supports oil prices, as it makes dollar-denominated commodities cheaper for traders using foreign currencies.
Tuesday's higher session comes ahead of the weekly supply statistics rundown from the American Petroleum Institute at about 4:30 p.m. EDT and official figures from the Energy Information Administration set for release on Wednesday at 10:30 a.m. EDT. Market participants broadly expect across-the-board draws in U.S. crude and petroleum products inventories after two consecutive weekly and counter-seasonal builds in crude stocks. Crude supplies typically decline in the summer amid strong refinery runs and steady fuel demand during peak driving season. Analysts forecast U.S. commercial crude stocks fell 3.1 million barrels per day (bpd) during the week ended Aug. 16, while gasoline and distillate fuel supply fell by 1.6 million bpd and 200,000 bbl, respectively.
Despite calls for inventory draws, analysts indicate the narrowing spread between the domestic and international benchmarks could lead to lower demand for U.S. crude exports and subsequent buildup in domestic stocks. WTI has substantially narrowed its discount to Brent this month as two new pipelines began transporting oil from the Permian Basin in West Texas and New Mexico for export to the global markets. While both pipelines relieved supply bottlenecks in the producing region, they also closed a hefty gap between the U.S. and global oil prices. The difference between the two benchmarks have been slowly converging since midsummer.
In its latest monthly statistical report, API said U.S. prices increased 4.9% in July to average $57.36 bbl, while Brent dropped 0.5% in the profiled month to $63.92 bbl, which narrowed the difference between the two variances to $6.56 bbl. However, in the same month U.S. petroleum exports fell 0.8 million bpd to 7.6 million bpd on its second largest drop after just hitting a record high in June.
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