DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange edged higher early Wednesday following the inventory report from the American Petroleum Institute showing U.S. commercial crude and gasoline stockpiles fell by a larger-than-expected margin during the week ended June 23, while supporting macroeconomic data in the United States further lifted market sentiment.

Further details of the API report released late afternoon Tuesday showed U.S. commercial crude oil inventories plunged 2.408 million barrels (bbl) last week, well above the expected drop of 1.8 million bbl. The drawdown in commercial inventory was realized even as stocks at the Cushing tank farm in Oklahoma, the underlying delivery point for the New York Mercantile Exchange West Texas Intermediate futures, increased by 1.45 million bbl. The Department of Energy also disbursed 1.467 million bbl of crude from the Strategic Petroleum Reserve during the week reviewed. Gasoline inventory also declined by a larger-than-expected margin, down 2.85 million bbl compared with estimates stocks would decline by 400,000 bbl. Stocks of distillate fuels, meanwhile, gained 777,000 bbl in the reviewed week, slightly more than expectations for a 400,000 bbl inventory build. Next, investors are awaiting the release of the official inventory report from the U.S. Energy Information Administration scheduled for 10:30 a.m. EDT.

Near 7:30 a.m. EDT, WTI August futures edged higher to trade near $67.82 bbl and international crude benchmark Brent for August delivery traded little changed near $72.28 bbl. The next-month delivery September contract is trading at a $0.25 bbl premium to the expiring contract, as Brent's backwardation along the forward curve continues to unwind.

NYMEX RBOB July futures advanced $0.0340 to $2.5508 gallon, with next-month August futures trading near $2.4536 gallon. NYMEX ULSD July contract was little changed near $2.3999 gallon, and the August contract gained to $2.3729 a gallon. ICE Brent August, NYMEX RBOB and ULSD July futures expire Friday (6/30) afternoon.

Underlying gains in the oil complex, latest macroeconomic data in the United States showed the economy still has some momentum heading into the second half of the year supported by improving consumer sentiment. The consumer confidence index released by the Confidence Board came in stronger than expected in June, jumping to its highest level since January 2022, as both the present situation and expectations components rose.

"Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next 6 to 12 months." said Dana Peterson, chief economist at The Conference Board. It must be noted, however, that the index is still well below the levels associated with a healthy economy.

Meanwhile, U.S. durable goods orders climbed for the third straight month in May, up 1.7% from the prior month. The recent increase in orders might be a sign that manufacturers have found a bottom, at least temporarily, after slumping in 2022. Orders rise in an expanding economy and shrink in a contracting one.

In reaction to better-than-expected data released this week, Goldman Sachs raised its Q2 U.S. economic growth tracking estimate by 0.4 percentage points to 2.2%.

Liubov Georges can be reached at liubov.georges@dtn.com