US crude oil up as tropical storm goes ashore in Texas
NEW YORK: US crude prices rose on Tuesday as a tropical storm moved ashore in the oil-producing state of Texas, but global oversupply limited gains and pressured Brent futures.
Expectations that U.S. crude inventories fell again last week and strong RBOB gasoline futures also lent support.
U.S. July crude rose 45 cents to settle at $59.97 a barrel, having swung from $59.42 to $60.37.
Brent front-month August crude fell 25 cents to settle at $63.70, off its $64.41 intraday peak and below Brent's 50-day moving average of $64.01.
Tropical Storm Bill went ashore on the Texas Gulf Coast and is expected to bring heavy rains and strong winds.
Output from offshore platforms, which pump about a fifth of U.S. crude oil production, has not been affected and initial reports from area refiners cited no effect on operations.
U.S. RBOB gasoline rose 2.54 cents to settle at $2.1245 a gallon, bolstered by last week's government inventory data showing the bulk of the 2.9 million-barrel drop in the week to June 5 occurred on the East Coast.
"Short of a bearish surprise tomorrow in the EIA gasoline data, such as a build of more than 2 million barrels, we look for nearby gasoline to remain strong," Jim Ritterbusch, president at Ritterbusch & Associates, said in a research note.
Helping U.S. crude outperform Brent is the expectation that this week's U.S. inventory data will show another draw.
U.S. crude stocks are forecast to have fallen 1.7 million barrels last week, according to a Reuters poll of analysts. Gasoline stocks are expected to be down 300,000 barrels.
A crude oil drop would be a seventh consecutive draw recorded by the government, with the next Energy Information Administration report due on Wednesday.
Unsold North Sea and West African crude building up in tankers offshore in the Atlantic Basin are weighing on physical prices. Supply is increasing even as European refiners run hard to take advantage of strong margins.
"The amount of crude oil afloat on the water off the coast of the UK is increasing, and that is putting considerable pressure on the North Sea price structure," Petromatrix oil analyst Olivier Jakob said in a note.
"The last time we had a North Sea structure as weak was in July of last year, a move that preceded the big flat price dump," he said.