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
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
Liubov Georges, 1.646.359.4088, firstname.lastname@example.org, www.dtn.com. (c)
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