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Oil Futures Settle Higher on Expected Crude Supply Draw
8/20 3:38 PM
Oil Futures Settle Higher on Expected Crude Supply Draw WASHINGTON, D.C. (DTN) --- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude posted modest gains for the third consecutive session on Tuesday amid expectations for a draw in US commercial crude inventories, while a weaker dollar lent additional price support. After back-and-forth trade for most of the session, NYMEX September West Texas Intermediate futures expired $0.13 higher at $56.21 bbl while the October WTI contract eased a penny to $56.13 bbl settlement. ICE October Brent futures settled up $0.29 at $60.02 bbl. The spread between the October U.S. benchmark and October Brent narrowed to $3.9 this afternoon. NYMEX September ULSD futures settled 2.12cts higher at $1.8543 gallon, and September RBOB contract advanced 1.67 cts at $1.6811 gallon, with both contracts extending gains from Monday's session. The US Dollar fell 0.18% in afternoon index trading to 98.045, reversing from 2-1/2 week high. A weaker greenback supports oil prices, as it makes dollar-denominated commodities cheaper for traders using foreign currencies. Today's higher session comes ahead of the weekly supply statistics rundown from the American Petroleum Institute at about 4:30 PM ET and official figures from the Energy Information Administration set for release on Wednesday at 10:30 AM ET. Market participants broadly expect across-the-board draws in US crude and petroleum products inventories after two consecutive weekly and counter-seasonal builds in the crude stocks. Crude supplies typically decline in the summer amid strong refinery runs and steady fuel demand during peak driving season. Analysts forecast US commercial crude stocks fell 3.1 million bpd during the week ended Aug. 16, while gasoline and distillate fuel supply drawn by 1.6 million bpd and 200,000 bbl respectively. Despite calls for inventory draws, analysts indicate that the narrowing spread between the domestic and international benchmarks could lead to lower demand for US crude exports and subsequent buildup in domestic stocks. WTI has substantially narrowed its discount to Brent this month as two new pipelines began transporting oil from the Permian Basin in West Texas and New Mexico for export to the global markets. While both pipelines relieved supply bottlenecks in the producing region, it also closed a hefty gap between the US and global oil prices. The difference between the two benchmarks have been slowly converging since mid-summer. In its latest monthly statistical report, API said U.S. prices increased 4.9% in July to average $57.36 bbl, while Brent dropped 0.5% in the profiled month to $63.92 bbl, which narrowed the difference between the two variances to $6.56 bbl. However, in the same month US petroleum exports fell 0.8 million bpd to 7.6 million bpd on its second largest drop after just hitting record high in June. Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, www.dtn.com. (c) 2019 DTN. All rights reserved.