WASHINGTON (DTN) --- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange reversed higher in overnight trade alongside surging equities and a weaker U.S. dollar as traders look to industry data showing a larger-than-expected drawdown in U.S. commercial crude oil inventories and a and a boost in demand projections from the U.S. Energy Information Administration.
The agency expects global oil demand will accelerate to 93.14 million barrels per day (bpd) in the second half of 2020, revising it higher by 250,000 bpd from the previous forecast. The 2021 demand estimate was upgraded by 280,000 bpd to average 100.16 million bpd, which is still below 2019 level of 101.25 million bpd.
"Global petroleum demand continued to recover in July, but growth in global coronavirus cases could bring renewed lockdown measures and presents considerable uncertainty to global oil demand for the remainder of the year," the report said.
Lingering effects of quarantine measures were seen in overnight data out of the European Union, with the United Kingdom's economy contracting a staggering 20.4% in the second quarter -- the most out of any industrialized nation. The UK went into lockdown later than many European peers and kept businesses closed well into June, causing prolonged and sustained economic damage. "The larger contraction primarily reflects how lockdown measures have been in place for a larger part of this period in the UK," said the Office of National Statistics. The eurozone's industrial production slowed to 9.3% in June versus 12.3% recorded the month prior, while posting a 12% year-on-year drop.
Oil futures got a boost Wednesday morning after the American Petroleum Institute reported across the board draws in U.S. commercial crude and product supplies during the week ended Aug. 7. The data showed crude oil supplies slid 4.401 million barrels (bbl) while supplies at the Cushing, Oklahoma hub rose 1.073 million bbl. Gasoline stockpiles dropped 1.310 million bbl and distillate inventories slid 2.949 million bbl last week, API reported.
The EIA will release official supply data Wednesday morning at 10:30 a.m. ET.
Near 7:30 a.m. ET, West Texas Intermediate futures for September delivery advanced 63 cents to $42.24 bbl and the spot month international Brent crude contract traded above $45 bbl. NYMEX ULSD September futures gained 1.68 cents to $1.2552 gallon and front-month RBOB futures surged 2.36 cents to trade near $1.2275 gallon.
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