Oil Futures Rise on Signs of Higher U.S. Demand

By Timothy PukoDow Jones Newswires

NEW YORK--U.S. oil prices rose slightly on Tuesday, overcoming a morning dip after U.S. car makers reported strong sales.

Light, sweet crude for July delivery settled up 19 cents, or 0.2%, at $102.66 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe also rallied late to settle up 0.2 cent, or 0.02%, to $108.85 a barrel.

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U.S. car makers on Tuesday reported their strongest sales since the 2008 financial crisis. Combined with other positive economic data on manufacturing growth from Monday, signs of stronger consumer demand exist, said Carl Larry, analyst for Oil Outlooks & Opinions.

"Fuel efficiency be damned, we're driving a lot more cars, which is going to increase the demand for gasoline," Mr. Larry said.

Not everyone agreed that those sales pushed the market Tuesday. Both gasoline and diesel closed lower on the day, though they did rally slightly before the market closed. Other analysts pointed to an industry group's weekly supply update coming later Tuesday and suggested traders were trying to anticipate a draw on oil stocks, which Mr. Larry agreed was likely a contributing factor.

U.S. crude-oil stocks are expected to decline modestly in data due Wednesday from the Department of Energy, according to a survey of analysts by The Wall Street Journal. Estimates from 13 analysts surveyed showed that U.S. oil inventories are projected to have fallen by 100,000 barrels, on average, in the week ended May 30.

The American Petroleum Institute, an industry group, put out its own data late Tuesday ahead of the EIA report showing a 1.4-million-barrel decline in crude-oil supplies, according to industry sources. The group also said that gasoline supplies rose by 800,000 barrels and distillate stocks declined by 300,000 barrels, according to the sources.

Many traders were waiting for those numbers before making a move, said Peter Donovan, energy broker for Liquidity Energy in New York. He noted that Tuesday's trading stayed within a 52-cent range.

"It was a very narrow, quiet range," Mr. Donovan said. "The story here is it was just such a vanilla day."

Front-month July reformulated gasoline blendstock, or RBOB, settled down 0.12 cent, or 0.04%, to $2.9487 a gallon. July diesel declined 1.15 cents, or 0.4%, to $2.8658 a gallon.