WTI oil futures inch lower ahead of U.S. supply data

Investing.com - West Texas Intermediate oil futures inched lower on Tuesday, as market participants looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.

On the New York Mercantile Exchange, crude oil for June delivery dipped 10 cents, or 0.18%, to trade at $58.83 a barrel during European morning hours. Futures held in a tight range between $58.66 and $59.04.

A day earlier, Nymex oil prices shed 22 cents, or 0.37%, to end at $58.93. New York-traded oil prices touched a five-month high of $59.90 on May 1.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 1.6 million barrels in the week ended May 1.

Total U.S. crude oil inventories rose by 1.9 million barrels last week to 490.9 million barrels, the most in at least 80 years, even as drilling activity fell.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 24 last week to 679, the 21st straight week of declines and the lowest level since September 2010.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

U.S. oil futures have been well-supported in recent weeks amid mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months amid an ongoing collapse in rigs drilling for oil.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery slumped 15 cents, or 0.23%, to trade at $66.30 a barrel, as investors locked in gains from a recent rally.

On Monday, London-traded Brent futures rose to $67.10, a level not seen since December 9, before closing at $66.45, down 1 cent, or 0.02%.

The spread between the Brent and the WTI crude contracts stood at $7.47 a barrel, compared to $7.52 by close of trade on Monday.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.4% to trade at 95.97 early Tuesday.

The dollar remained supported after data on Monday showed that U.S. factory orders rose at the fastest pace in eight months in March, adding to indications that the economic recovery is regaining momentum.

New orders for U.S. factory goods rose by a larger than forecast 2.1% in March after a revised 0.1% decline in February.

The data came after economic reports late last week indicated that the U.S. recovery had turned a corner following a recent soft patch.

Later in the day, the U.S. was to release data on construction sector activity and the trade balance, while the Institute of Supply Management was to release a report on U.S. service sector activity.

Investors are also waiting for the U.S. nonfarm payrolls report for April due on Friday for further clues on when the Federal Reserve may raise interest rates.