Oil futures inch higher ahead of U.S. supply data, OPEC report

Investing.com - Crude oil futures inched higher on Tuesday, as market participants looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.

On the New York Mercantile Exchange, crude oil for June delivery tacked on 27 cents, or 0.45%, to trade at $59.52 a barrel during European morning hours. Prices held in a tight range between $59.13 and $59.54.

A day earlier, Nymex oil shed 14 cents, or 0.24%, to end at $59.25. New York-traded oil futures hit a five-month peak of $62.58 on May 6.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 125,000 barrels in the week ended May 8.

U.S. oil futures have been well-supported in recent weeks as an ongoing collapse in rigs drilling for oil in the U.S. added to expectations that shale oil production has peaked and may start falling in the coming months.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 11 last week to 668, the 22nd straight week of declines and the lowest level since September 2010.

Oil traders have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

But market analysts also warned that the recent rally in the oil market could prompt some producers to dial up their output if prices hold above more than $60 a barrel.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery added 29 cents, or 0.44%, to trade at $65.91 a barrel. On Monday, Brent prices lost 54 cents, or 0.82%, to close at $65.62. London-traded Brent futures rallied to a five-month high of $69.93 on May 6.

The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets later Tuesday, as investors look for further clues on global supply and demand prospects.

The spread between the Brent and the WTI crude contracts stood at $6.39 a barrel early on Tuesday, compared to $6.37 by close of trade on Monday.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.5% to hit 94.64, moving off the previous day's high of 95.33.

Market players looked ahead to Wednesday's U.S. retail sales report for April, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

Recent economic reports have indicated that the economy has slowed since the start of the year, prompting many investors to push back expectations on the timing of an initial rate hike by the Federal Reserve.