Oil futures pointed higher Wednesday ahead of closely watched data on U.S. crude inventories from the Department of Energy.
Light, sweet crude for June delivery gained $1.69, or 1.8%, to $98.60 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange added $1.22, or 1.1%, to $111.21 a barrel.
Crude futures were lifted late Tuesday after a survey by the American Petroleum Institute showed U.S. gasoline inventories fell unexpectedly last week, signaling better-than-expected demand. Traders will be closely watching whether the draw is reflected in the more closely watched DOE survey, due at 10:30 a.m. EDT.
"I think we're looking for a bottom in crude, and I think that's what's helping us along," said Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage in New York.
The API, an industry group, said gasoline supplies last week fell 676,000 barrels. Crude supplies, however, rose a greater-than-expected 2.7 million barrels, according to the API. Stocks of distillates, including heating oil and diesel, fell 2.8 million barrels.
Analysts surveyed by Dow Jones Newswires expect gasoline inventories last week rose 600,000 barrels. Oil inventories rose 700,000 barrels, while distillate stocks remained unchanged, according to the analysts' average estimate.
Market participants have been closely eyeing inventory data in recent weeks for hints about U.S. demand levels ahead of the all-important summer driving season. Several recent reports have suggested that consumers are balking at $4-a-gallon gasoline--a level already reached in many parts of the country--and may be cutting back time on the road.
Pump prices have recently given back ground, coinciding with a broad retreat in crude prices. At the retail level, a gallon of regular gasoline averaged $3.93 a gallon Wednesday, down 3 cents from a week ago.
Nymex crude is down about 14% so far in May, retreating sharply from its most recent high of $114.83 a barrel hit May 2.
Gasoline futures also headed higher Wednesday. Among the most volatile contracts recently, gasoline traded sharply higher a week ago on concerns that the Mississippi River floods would threaten production at refineries along the Gulf Coast. The opening of a key floodway eased those concerns this week, sending prices falling below $3 a gallon.
Front-month June reformulated gasoline blendstock, or RBOB, recently gained 4.07 cents, or 1.4%, to $2.9600 a gallon. June heating oil added 3.51 cents, or 1.2%, to $2.8802 a gallon.
Larry said Nymex prices may have found a floor in the mid-$90 level. However, Jim Ritterbusch, head of trading advisory firm Ritterbusch & Associates, said macroeconomic indicators due Thursday, including weekly jobless claims, could push crude toward $92 should they disappoint.
"We still see additional downside risk in nearby WTI crude futures of about $3-a-barrel below yesterday's lows," Ritterbusch said.