Morning Market Overview

Oil Futures Tick Up Early ahead of Weekly Supply Data Washington, D.C. (DTN) — New York Mercantile Exchange oil futures nearest to delivery and Intercontinental Exchange Brent futures were posting early gains on expected inventory supply draws after Hurricane Barry this past weekend disrupted Gulf of Mexico operations.

Near 9:00 AM ET, NYMEX August West Texas Intermediate crude futures traded up 30cts at $59.89 bbl while September ICE Brent gained 22cts to $66.70 bbl. NYMEX August RBOB futures added 0.55cts to $1.9358 gallon and August ULSD futures ros 11.11cts to $1.9627 gallon. “To some extent, a drop in U.S. crude stocks last week would have been factored in on the account of Hurricane Barry. But if we see something much larger than expected, it could be another lag up for crude” said ANZ analyst.

Market participants will get the clues on U.S. inventory levels from preliminary data by American Petroleum Institute set for release this afternoon at 4:30 PM EST, while official government data will be published Wednesday (7/17) at 10:30 AM EST. Market participants expect U.S. crude oil inventories declined 4.2 million bbl in the week ended July 12, while gasoline stockpiles fell 1.5 million bbl and distillate supplies build 300,000 bbl in the profiled week.

WTI settled below $60 on Monday after Barry passed through the Louisiana coast without causing major damage to crude operations or infrastructure. Oil prices were also weighed down by signs of further increases in output from the United States, which undermines the efforts by the Organization of the Exporting Petroleum Countries and Russia to reduce global stockpiles.

The Energy Information Administration expects tight shale oil production in seven key U.S. producing regions to average 8.546 million bpd in August, up 49,000 bpd or 0.6% from 8.497 million bpd in July. Due to sizable increases in U.S. shale output, Paris-based International Energy Agency projects continued build-up in global crude stockpiles in 2019 and 2020, resulting in persistent weak market fundamentals. Despite ongoing 1.2 million bpd supply cuts from 14- member cartel and the allies, re-balancing of the market is still some way off” said IEA.