WASHINGTON (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange erased earlier losses to finish the Tuesday session modestly higher, in sync with surging equity markets as traders anticipate weekly oil inventory data to show crude and gasoline draws in U.S. during the week ended July 10.
Domestic crude oil stockpiles are expected to have fallen 1.3 million barrels (bbl) during the week ended July 10 with forecasts ranging from a decrease of 4 million bbl to an increase of 3.1 million bbl. Gasoline stockpiles are likely to have decreased 900,000 bbl from the previous week and stocks of distillates are estimated to have risen 1.6 million bbl, according to analysts polled by Wall Street Journal.
The American Petroleum Institute will release its inventory report at 4:30 p.m. EDT, followed by official data from U.S. Energy Information Administration at midmorning on Wednesday.
WTI futures swung between modest gains and losses for most of the session before getting a late afternoon bump from rallying equities. The Dow Jones Industrial Index rose over 500 points on Tuesday and S&P 500 climbed 1% while the Nasdaq Composite was up 0.4%.
NYMEX West Texas Intermediate August futures finished Tuesday trade just above $40 bbl and international benchmark Brent crude settled at $42.90 bbl. NYMEX ULSD August futures registered little change on the session at $1.2208 gallon and front month RBOB futures eroded further to a one-week low $1.2477 gallon.
RBOB futures remain under selling pressure following California Governor Newsom's announcement Monday of statewide reclosures of some businesses, including indoor dining, bars and gyms. There are growing signs the U.S. economic recovery is flatlining amid the mounting number of coronavirus infections, hospitalizations and fatalities across parts of the country. Mobility index data show traffic in the United States has hit a ceiling in the most recent weeks, with notable declines occurring in new COVID-19 hotspots, correlating closely with the surging number of infections. In contrast, countries belonging to the European Union recorded steady gains in traffic congestion as infection spread continued to decrease.
Separately, crude oil production from Organization of the Petroleum Exporting Countries plunged 1.89 million barrels per day (bpd) to 22.27 million bpd in June, according to their monthly Oil Market Report, the lowest daily output for the 13-member cartel since at least 1990.
OPEC's de-facto leader Saudi Arabia accounted for the lion's share of that drop, down 923,000 bpd for an average daily output of 7.557 million bpd. Iraq has also made a big reduction of 449,000 bpd in its daily output to 3.716 million bpd, a nearly 5-year low. While that remains above its quota of 3.59 million bpd, the country has pledged to make up for its overproduction later this summer with extra cuts. Nigeria has made the same pledge with its June production averaging 1.504 million bpd, still above its cap of 1.41 million bpd.
OPEC+ Joint Ministerial Committee is expected to recommend easing production cuts to 7.7 million bpd from the current 9.7 million bpd beginning Aug. 1 when the group meets via web-conference on Wednesday.
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