WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange extended higher in early trade Wednesday, supported by rebounding equities and hopes that higher vaccination rates across industrial economies of the United States and the European Union could offset the impact of resurgent pandemic, fueled by the vertiginous spread of the Delta variant of coronavirus.
Near 7:30 a.m. ET, NYMEX September West Texas Intermediate futures jumped above $68 per barrel (bbl), up $0.81 on the session, and the international crude benchmark Brent for September delivery spiked $1.04 to trade near $70.39. NYMEX August RBOB futures advanced 1.44 cents to $2.1451 a gallon, with August ULSD futures up 2.36 cents to $2.0363 gallon.
Gains in the oil complex came despite the American Petroleum Institute reporting late Tuesday that U.S. commercial crude and gasoline stockpiles posted surprise builds in the week ended July 16, with distillate inventories falling below consensus.
The data showed crude oil stocks gained 806,000 bbl from the previous week, while at Cushing, the delivery point for WTI, stocks tumbled 3.567 million bbl. Despite the build, commercial crude stocks remain near their lowest level since February at 437.6 million bbl. Gasoline stockpiles, meanwhile, jumped 3.307 million bbl last week, missing calls for a draw of 1.1 million bbl. Bullish part of the report were distillate fuels, with stocks falling 1.225 million bbl from the previous week compared to an expected 700,000 bbl build.
Traders now await the release of official data from the U.S. Energy Information Administration due out 10:30 a.m. ET.
In financial markets, U.S. equity futures powered higher and the dollar index pared overnight gains heading into the opening bell on Wall Street as investors trimmed their bets for derailed economic growth in the second half of the year. Few policy experts expect a return to spring 2020 style lockdowns, which shuttered global economy and social mobility, with majority of citizens in the United States, United Kingdom and European Union having now been fully or partially vaccinated. Goldman Sachs analysts expect the Delta variant would be "another manageable speed bump" for the oil markets, adding that vaccines should limit the hospitalizations and deaths seen during first waves of the pandemic.
Goldman Sachs estimates the Delta-fueled wave of infections could shave up to 1 million barrels per day (bpd) from global oil demand in coming months even if vaccines prove effective at lowering hospitalization the in the developed economies.
Global COVID-19 infections continued to rise this week, with record rates reported in South Korea, Thailand and Japan. Domestically, infection rates spiked over 60% from the previous week and are up 150% from two weeks ago, with the Delta variant accounting for around 83% of new cases, according to the data published by the Centers for Disease Control and Prevention.
John Hopkins University and Medicine's Coronavirus Resource Center shows COVID-19 cases surging in the U.S. Northeast and Mid-Atlantic states, in Chicago and surrounding metro regions, in southern Florida, eastern Texas, and the Pacific Southwest and Northwest. Globally, John Hopkins reports 61,628 new cases in Spain, 40,671 new cases in the U.K., 34,257 new cases in Indonesia, 30,093 new cases in India, with 52,111 new cases in the U.S.
Liubov Georges can be reached at email@example.com