The oil complex nudged slightly higher during light trading Tuesday. Those gains were led by NYMEX August RBOB, which settled 4.23 cents higher at $2.9260/gal.
NYMEX August crude settled 39 cents higher at $103.53/barrel, while ICE August Brent settled up 38 cents at $107.81/b. NYMEX August ULSD finished the session 56 points higher at $2.9857/gal.
Although the consensus of analysts surveyed by Platts Monday expects US gasoline stocks to have increased by 1.2 million barrels in the most recent week, others are not convinced.
Expectations of a draw for this week's data -- at a time when crude is particularly strong -- has seen RBOB bid higher, especially with the summer driving season ramping up, Tradition Energy analyst Gene McGillian said.
Oil Outlooks President Carl Larry expects US gasoline stocks to have fallen 1.5 million barrels as implied demand for gasoline has trended higher over recent weeks.
"Margins were pretty low last week, and with the Midwest ramping up perhaps we'll see the Gulf Coast cut back, as runs there were pretty high last week," Larry said.
Gulf Coast refinery utilization rates were at 95.6% of capacity in the week that ended June 28, EIA data shows. Analysts polled Monday by Platts expect this week's data to show rates increasing another 0.3 percentage point.
The American Petroleum Institute will release its weekly report at 4:30 p.m. EDT (2030 GMT) Tuesday, while the US Energy Information Administration is scheduled to release its weekly data at 10:30 a.m. EDT (1430 GMT) Wednesday.
Meanwhile, crude futures traded in a near-$1/b range, tracking US equities higher towards during much of the afternoon session.
"We're basically tracking the equities rally," McGillian said. "And some of the profit-taking we've been seeing has eased, especially as the market's watching the Middle East pretty closely."
The Dow Jones Industrial Average was up around 77 points at 15,302 and the S&P 500 was up more than 11 points at 1,652 around the NYMEX settle. A strong US dollar, however, was likely holding back any stronger rally. The US Dollar Index was up 0.41% at 84.60.
Implied volatility for at-the-money August NYMEX crude options was around 23.5% at the settle, down from over 27% on Monday. While still higher than normal, such NYMEX August implied volatility suggests that crude futures could break sharply either higher or lower, depending on headlines and upcoming US oil inventory data.
Analysts surveyed Monday are expecting US crude stocks to have declined 3.8 million barrels.
"We can break out either way," TNT Energy trader Tim Corr said. "With the dollar weakening yesterday, and stocks up, a lot of this is just the fear premium. If we go below $102 we'll hit $100 pretty fast."
Open interest for NYMEX August $110 calls and August $90 puts has increased over the past few days. August $110 calls, insurance against a further rise in crude futures, increased by 6,549 lots to 26,399 contracts between July 2 and 3. This is up from just over 11,000 lots at the beginning of June. Over the past few sessions, however, open interest has ticked slightly lower to 23,900 lots as of Monday.
August $90 puts, a bet in the opposite direction, saw open interest double to 30,185 lots on July 2 from 14,708 lots at the beginning of June. As of Monday, open interest at this strike price was down slightly to 28,983 lots.
