Oil drifts ahead of U.S. inventory data, strong dollar  

Investing.com -- Crude prices drifted on Tuesday on the back of a strengthening dollar and ahead of the release of weekly data on U.S. oil supply-demand.

The dollar advanced against major currencies on Tuesday after relatively solid data on U.S. manufacturing and construction offset a decline in job openings last month to the lowest level in more than two years.

That kept a leash on crude prices after a near six-week run higher on the rhetoric of OPEC production cuts which until now has not been verified by adequate data.

One proof of that could come from Wednesday’s Weekly Petroleum Status Report from the Energy Information Administration, or EIA. Ahead of the U.S. government report, industry group American Petroleum Institute, API, will release after Tuesday’s market close its own supply-demand numbers for last week.

Saudi Arabia had committed to cut an additional million barrels per day from its supply through July, on top of reductions by the 13-member OPEC, or the Organization of Petroleum Exporting Countries, which it heads. Russia, which leads 10 independent oil producers, has also volunteered cuts. The two groups together form the OPEC+ alliance.

Their pledges on lower production have not matched up with July oil supply-demand data released thus far by the EIA.

“As I’ve said, no one is looking for a barrel-for-barrel correlation between the promised cuts and the weekly U.S. petroleum inventories,” said John Kilduff, partner at New York energy hedge fund Again Capital. “But the talk of market tightness which dominates every conversation on oil has to show up in the EIA data. Otherwise this rally is at the risk of reversal.”

With a half-hour to Tuesday’s settlement, U.S. West Texas Intermediate, or WTI, crude was down 6 cents, or 0.07%, to $81.74 per barrel. The U.S. crude benchmark gained more than $11, or nearly 16%, for July.

London-based Brent crude was down 16 cents, or 0.2%, to $85.27. The global oil benchmark rose for last month.

In data due at approximately 16:30 ET (20:30 GMT), API will give a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended July 28. The numbers serve as a precursor to official inventory data on the same due from the EIA a day later.

For last week, analysts tracked by Investing.com expect the EIA to report a crude stockpile drop of 0.071M barrels, versus the 0.6M barrel reduction reported during the week to July 21.

On the gasoline inventory front, the consensus is for a draw of 0.049M barrels over the 0.786M-barrel decline in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.

With distillate stockpiles, the expectation is for a drop of 0.216M barrels versus the prior week’s deficit of 0.245M. Distillates are refined into heating oil, diesel for trucks, buses, trains and ships and fuel for jets.