WASHINGTON (DTN) -- New York Mercantile Exchange nearest delivery oil futures and Brent crude on Intercontinental Exchange edged higher in pre-inventory trade Wednesday, with preliminary data indicating a surprise draw in U.S. commercial crude supply and a fourth consecutive decrease in gasoline inventories during the week-ended May 15, fueling hopes for a demand recovery as investors look to the reopening of major economies.
U.S. equity futures bounced higher and global stocks were mixed, likely finding support from comments by U.S. Treasury Secretary Steven Mnuchin made during testimony before the Senate Banking Committee.
"We expect economic conditions to improve in the third and fourth quarter and into next year," Mnuchin said.
Federal Reserve Chairman Jerome Powell was more circumspect in his comments before the committee, indicating an extension of the small business loan program and further measures to support the economy against the headwinds of the pandemic are necessary.
Top financial advisors to the White House warned the number of unemployed are likely to increase in the coming weeks, which is capping prospects for a swift economic recovery.
The Federal Reserve will release minutes at 2 p.m. ET from its April 28-29 meeting when officials pledged to use a full range of tools to support the U.S. economy but didn't introduce new measures.
Separately, American Petroleum Institute reported domestic crude stocks slid 4.8 million barrels (bbl) during the week ended May 15, with most estimates suggesting a modest build of 900,000 bbl for the reviewed week. Data showed Cushing oil storage tanks in Oklahoma, the delivery point for West Texas Intermediate futures, decreased for the second straight week, down a steep 5 million bbl. Gasoline inventories declined 651,000 bbl and distillate stockpiles jumped 5.1 million bbl, reflecting a contracting economy that has weakened demand for diesel.
In early trading, front-month West Texas Intermediate July futures edged higher to trade near $32.20 bbl and Brent crude for July delivery advanced $0.58 to trade near six-week spot high $35.23 bbl. NYMEX June ULSD futures gained 2.68 cents to $1.0007 gallon after fading Tuesday from Monday's five-week spot high $1.0286 gallon. NYMEX June RBOB contract was up 2.13 cents after trading near a 10-week spot high $1.0712 gallon.
Oil futures have staged an impressive comeback in recent weeks amid signs fuel demand is recovering across all major economies, with traffic data showing higher mobility index in the United States, China and Western Europe. However, the speed and depth of that recovery remains far from certain. Consultants with the Eurasia Group cite, "global recession, cautious consumers and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia."
Overnight report from Bloomberg suggests new cases in the epicenter of the outbreak at Wuhan, China, are displaying a different pathogen than they did in the early stages of the pandemic, complicating efforts to detect the virus before it spreads.
Liubov Georges can be reached at email@example.com
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