WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied in early morning trade Wednesday, with the U.S. benchmark trading at its highest since early March following an overnight collapse in the U.S. dollar and industry data showing a larger-than-expected draw in domestic crude oil inventories during the final week of July. Traders and investors now await official supply data from U.S. Energy Information Administration out at 10:30 a.m. ET.
Preliminary data from the American Petroleum Institute showed a massive 8.587 million barrel (bbl) draw from U.S. commercial crude oil supplies during the week ended July 31, far exceeding calls for a 3.1 million decline. Stocks at the Cushing hub in Oklahoma rose 1.63 million bbl on the week. Data also showed gasoline stockpiles dropped 1.748 million bbl and distillate inventories jumped 3.824 million bbl last week.
WTI futures were further bolstered by an overnight drop in the U.S. dollar, extending its recent decline to a fresh 28-months low 92.915 in index trade as investors bet on more coronavirus stimulus from U.S. Federal Reserve and Congress.
Overnight reports suggest negotiations between congressional Democrats and the White House on a new round of coronavirus relief have begun to move in the right direction, with both sides optimistic the deal could be reached by the end of this week.
Futures contracts tied to the Dow Jones Industrial Average are positioning for a 200-point opening bell gain while those linked to the S&P 500, which has gained 2.3% for the year, are looking at 20-point bump to start the Wednesday session.
Bullish sentiment was also supported by the continued fall in U.S. new coronavirus cases, which fell below 50,000 for the first time since early July, according to the U.S. Centers for Disease Control.
In early trading, the spot month US crude benchmark rallied $1.04 or 2.4% to $42.73 bbl and the international Brent crude contract advanced $1.01 to $45.44 bbl. NYMEX ULSD futures for September delivery jumped 2.28 cents to $1.2814 gallon and the front-month RBOB contract surged 2.81 cents or 2.31% to $1.2424 gallon.
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