Oil futures were modestly higher early Wednesday, rebounding from yesterday's losses after a private report showed US crude stocks fell more than forecasted last week.
Weak demand and the high levels of supply from global oil markets continue to weigh on the crude benchmarks ahead of the crude stocks data from the Energy Information administration due at 14:30 GMT on Wednesday.
Crude stockpiles are expected to have fallen 1.7 million barrels on average in the week to August 1, according to analysts' median forecast. Gasoline stockpiles are expected to rise by 100,000 barrels while stocks of distillates, including heating oil and diesel, are also expected to have increased by 600,000 barrels. Refinery use is expected to have fallen by 0.5 percentage points to 93.0 percent of capacity.
As of 03:39 a.m. ET:
- West Texas Intermediate for September Delivery rose 0.20% to $97.57 a barrel on the New York Mercantile Exchange
- Brent Oil rose for September delivery rose 0.17% to 104.79 a barrel on the ICE Exchange in London
Investors continue to watch the latest developments in Eastern Europe the Middle East and North Africa, where the unrest and violence continues to boost the choppy trade, while fears over supply disruptions seem to have eased slightly, shifting focus to the falling stocks in the world's largest economy.
Refineries probably operated at 92.8 percent of capacity on Aug. 1, down 0.7 percentage point from the prior week, according to forecasts by Bloomberg before a government report on Wednesday.
US refiners usually schedule maintenance for September and October when gasoline demand declines. Brent also fell as Libya said that the Es Sider oil port, the country’s biggest, is in talks to resume exports.
Cushing supplies fell to 17.9 million in the week ended July 25, the least since October 2008, according to an Energy Information Administration report July 30. Stockpiles have dropped from a peak of 41.8 million this year as new pipelines have sent oil to the Gulf Coast, home to about half of U.S. refining capacity.
The announcement July 31 that a Coffeyville, Kansas, refinery that gets oil from Cushing, Oklahoma may be offline for most of August sent WTI to a four-month low. The 115,000-barrel-a-day plant may remain idle for four weeks after a July 29 fire, CVR Refining LP (CVRR) Chief Executive Officer Jack Lipinski said.
According to reports, pro-Russian separatists fired on unarmed Ukraine soldiers earlier in the day, although there is no official information about any casualties.
Meanwhile, a 72-hour ceasefire has come into effect in Gaza and the stage now appears set for discussions in Egypt for finding a solution to end the month-long conflict.
The situation in the Middle East continued to aggravate with militants in Iraq in controlling the country's biggest dam, some important oil fields, and several towns.
Kurdish fighters recaptured Sinjar and Rabia’ah after heavy fighting yesterday, the Kurdistan Democratic Party said. At least 50 Islamic State militants were killed in the battle for Wana south of Mosul dam.
WTI climbed to a nine-month high in June after militants from a breakaway al-Qaeda group known as Islamic State captured the city of Mosul. Futures dropped when the rebel advance stalled, sparing the country’s south, home to more than three-quarters of its oil output.