WTI at one-week high ahead of inventories data, Libya in focus

West Texas Intermediate crude rose for a second day as market analysts expect a sixth weekly drop out of seven to be reported this Wednesday. On Monday, protesters shut back down Libyas two biggest crude oil export terminals, hours after they had reopened, which was followed by the closure of more oilfields as a sign of protest. Libyas deputy oil minister pledged that problems should be resolved by Thursday.

On the New York Mercantile Exchange, WTI crude for delivery in September rose to $106.71 a barrel at 7:44 GMT, up 0.56% on the day. Prices soared to $106.54 earlier in the session, the highest level since August 6, while days low stood at $105.96 a barrel. Light, sweet crude rose 0.03% on Monday and has so far advanced 0.6% on the week after declining 0.64% the preceding one.

Meanwhile on the ICE, Brent crude for October delivery surged to $108.20 a barrel by 7:44 GMT, up 0.42% on the day. Futures held in range between days high at $108.00 and low of $107.73 a barrel respectively. The European benchmark slipped 0.29% on Monday, trimming current weeks advance to 0.1% after falling 0.65% the preceding one.

Oil prices rose on Tuesday ahead of Wednesdays Energy Information Administration crude oil inventories report, which is expected to show a sixth weekly drop in crude reserves out of the last seven weeks. According to a Reuters survey of analysts, stockpiles should have declined by 1.55 million barrels in the week ending August 9, while gasoline inventories are expected to have dropped by 900 000 barrels. Distillate fuel reserves probably rose, the poll showed.

Meanwhile, stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and delivery point for contracts traded on the New York Mercantile Exchange, have fallen for the last five weeks to 39.9 million barrels, the lowest since March 2012.

The industry-funded American Petroleum Institute will publish its separate report later today but it is considered as less reliable than EIAs data as it is based on voluntary information from operators of pipelines, bulk terminals and refineries. The government agency will public its statistics tomorrow at 14:30 GMT.

Meanwhile, tension over global supply continued to support prices as Libyas two biggest ports were shut back down on Monday, right after they were reopened on Sunday. Es Sider, Libyas largest terminal, was closed on July 28 due to protests by the Petroleum Facilities Guard, which is insisting for better working conditions. Libya, whose economy depends mainly on its oil output, has cut its production pace by more than half to 800 000 barrels per day in July. As an attempt to ease concern on the markets, Libyas deputy oil minister said that the country could resume its exports by Thursday as the two sides reached an agreement to end the strike.

QE outlook

Meanwhile, market players remain cautious ahead of this weeks key U.S. economic data, which should provide information about the future of Quantitative Easing. July’s Retail Sales are due on Tuesday and are expected to have advanced by 0.3%, compared to a 0.4% jump in the preceding month. Import prices are projected to have outdone the previous period both on annual and monthly basis. On Wednesday, producer prices (Producer Price Index) will likely show a slower advance than the preceding period both year-on-year and month-on-month. Thursday’s consumer inflation (CPI) should have advanced by 0.2% compared to June and 2.0% from a year earlier. Industrial Production is expected to have surged 0.3%, marking the same advance as in June. Both of Friday’s Building Permits and Housing Starts are projected to have advanced last month.

Apart from the demand side, dollar-denominated commodities have largely been tracking shifting expectations of an earlier-than-expected tapering of Feds monetary easing program, on which the strength of the dollar depends. The greenback trades inversely to dollar-priced raw materials as its strengthening makes commodities more expensive for foreign currency holders and reduces their appeal as an alternative investment.

Carl Larry, president of the Houston-based consultancy Oil Outlooks and Opinions, said for Reuters: “Weve seen the hedge funds pulling out of commodities, including oil already. Everyone is on the sidelines and waiting for some clear signals from the Fed as to when they will start cutting back stimulus.”