Oil Futures Gain on Hope of Quick OPEC+ Deal, Cushing Draw
WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on New York
Mercantile Exchange and Brent crude on Intercontinental Exchange shifted higher
in overnight trade, with industry data indicating another weekly draw from
Cushing oil storage as markets look to a post-lockdown supply deal among
Organization of the Petroleum Exporting Countries and Russia-led partners.
Near 7:30 AM ET, NYMEX West Texas Intermediate July futures climbed $0.92 to
trade above $36 bbl and Brent crude for August delivery traded up $1.02 at
$39.36 bbl. NYMEX ULSD July futures rallied 4.49cts to $1.0739 gallon and
front-month RBOB July contract gained 3.63cts to $1.1028 gallon.
Oil prices advanced heading into an expected OPEC+ meeting on Thursday, with
optimism building for Saudi Arabia and Russia to quickly agree on extending the
current 9.7 million bpd deal for another two months through August. Overnight
reports indicate Moscow has warmed up to the idea of extending cuts after a
telephone call between U.S. President Donald Trump and Russia's President
Vladimir Putin on Monday. Both leaders pledged to work together on stabilizing
jittery markets as the global economy reemerges from the coronavirus lockdown.
Under the OPEC+ deal agreed to April 12th, the 9.7 million bpd cuts were due
to run through May and June, scaling back to 7.7 million bpd from July to
December. Saudi Arabia and Gulf allies have been pushing to keep deeper cuts in
place for longer, citing uncertain path for demand recovery in the summer
months. Producers have yet to announce the earlier date for their planned
meeting initially scheduled for June 10.
Separately, industry data released late Monday showed a fourth consecutive
crude drop at the key Cushing supply depot in Oklahoma, the delivery location
for the WTI futures contract. In the previous week, supplies in Cushing farm
tanks fell 3.395 million bbl, sliding below the five-year-average to 53.462
million bbl. American Petroleum Institute and U.S. Energy Information
Administration are due to release weekly inventory reports at 4:30 PM ET and
10:30 AM ET Wednesday, respectively.
In financial markets, U.S. equity futures continued higher in premarket
trade Tuesday, seemingly shrugging off violent riots in major U.S. cities. New
York City, Washington, D.C. and Los Angeles announced nightly curfews after six
straight days of looting and vandalism.
Trump addressed the nation from the Rose Garden Monday, calling on mayors
and governors in affected states to "establish an overwhelming law enforcement
presence until the violence has been quelled."
"If a city or state refuses to take the actions that are necessary to defend
the life and property of their residents, then I will deploy the United States
military and quickly solve the problem for them," he added.
Social unrest in the nation's major cities is likely to take its toll on the
economic rebound and by extension demand for refined fuels. Mobility data shows
traffic activity in New York City, Washington, D.C., and Los Angeles remains
below the Jan. 13 baseline despite gasoline demand typically growing following
Memorial Day. In Chicago, authorities suspended rail and bus service, while
advising essential workers to stay home.
U.S. dollar continued lower in overnight trade, plunging to a better than
12-week low 97.420 against a basket of foreign currencies.
Liubov Georges, 1.646.359.4088, email@example.com, www.dtn.com.
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