WASHINGTON (DTN) -- Nearby month delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange edged higher in pre-inventory trade early Wednesday after preliminary data from the American Petroleum Institute showed crude oil and gasoline stockpiles fell by more than estimated last week and upbeat economic data out of the United States and China point to gradual demand rebound.
API data reported Tuesday U.S. commercial crude oil inventories tumbled 6.3 million barrels (bbl) during the final week of August, nearly twice the expiations for a 3.1 million bbl draw.
Supplies at Cushing, Oklahoma hub dropped 237,000 bbl on the week. Gasoline stockpiles also dropped by a larger-than-estimated 5.761 million bbl and distillate inventories declined 1.424 million bbl during the week profiled.
Traders now await official statistics from the U.S. Energy Information Administration due out 10:30 a.m. ET.
In early trading, West Texas Intermediate October futures edged higher to trade just under $43 bbl and Brent crude futures for November delivery traded 22 cents higher at $45.81 bbl. Prompt-month RBOB futures climbed 1.85 cents to trade near $1.2432 gallon and NYMEX ULSD futures advanced to $1.2431 gallon.
Capping the upside for the oil complex, U.S. dollar advanced 0.3% in overnight activity to trade near 92.6 cents after domestic manufacturing activity rebounded more than expected in August to the highest index rating in over a year.
"The past relationship between the PMI and the overall economy indicates that the PMI for August (56) corresponds to a 3.9% increase in real gross domestic product (GDP) on an annualized basis," said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.
The gains in August's manufacturing index were mostly driven by New Orders, up 6.1% from the previous month to 67.6% in August, while the Backlog of the Orders registered an increase of 2.8% to 54.6% on the month.
As global demand partially recovers, producers have begun returning some of crude back to the markets. Organization of the Petroleum Exporting Countries raised output for the second consecutive month, up 950,000 barrels per day (bpd) to 24.27 million bpd in August, according to a survey published by Reuters. The biggest rise in production came from Saudi Arabia, which pumped 9 million bpd last month, up 600,000 bpd from July. The second-biggest increase came from the United Arab Emirates, followed by smaller increases from Angola and Algeria.
Iraq and Nigeria, however, reduced their output from the previous month, lifting overall compliance for the 13-member cartel to 99% in August. Iraq, Nigeria and Brunei among others have submitted their plans for "catch-up" on output cuts to OPEC's Secretariat on Friday, according to Energy Intelligence report.
Iraq submitted a plan that proposed additional cuts of 400,000 bpd in August and September, while Kazakhstan plans to curb 94,500 bpd over the same two-month period. OPEC+ scaled back supply cuts to 7.7 million bpd in August from 9.6 million bpd from May through July. However, if additional cuts of 1.15 million bpd were implemented from Aug. 1 through Sep. 30, then the cartel's total production cuts in those two months would amount to 8.85 million bpd.
Liubov Georges can be reached at firstname.lastname@example.org
(c) Copyright 2020 DTN, LLC. All rights reserved.