U.S. Oil Prices Inch Higher

U.S. oil prices climbed Tuesday on strong demand for crude and the threat of a tropical storm along the Gulf Coast.

Light, sweet crude for July delivery, the U.S. benchmark, gained 45 cents, or 0.8%, to $59.97 a barrel on the New York Mercantile Exchange. The gains snapped a three-session losing streak.

The global Brent contract for August ended down 25 cents, or 4%, at $63.70 a barrel on the ICE Futures Europe exchange. Brent hit a fourth-straight losing session, its longest losing streak since mid-March.

U.S. production may have peaked and the country’s refineries are still likely ramping up from historically high levels, giving some hope the market has found a balance. Analysts surveyed by The Wall Street Journal expect the agency to report that crude supplies fell by 1.8 million barrels last week and refineries increased their usage rate by 0.2 percentage point.

The latest weekly inventory data are due from the Energy Information Administration on Wednesday. The American Petroleum Institute, an industry group, said late Tuesday that its own data for the same week showed a 2.9-million-barrel draw in crude-oil supplies, according to sources. The group also said that gasoline supplies fell by 2.9 million barrels, according to sources. API said U.S. distillate stocks were up 1.6 million barrels in the week, according to a source.

“There’s an expectation that we’re going to see another drawdown in crude oil inventories. There’s a sense U.S. production is peaking,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “And we’re getting a psychological bounce from Tropical Storm Bill.”

Mr. Flynn and others believe the threat of tropical storms has faded in recent years as the shale-drilling boom has moved wells and the most critical oil fields on shore and often farther north. But many are still watching the new storm off the central Texas coast, expecting that it could disrupt operations at offshore drilling platforms in the Gulf of Mexico and refineries in Texas. About 45% of U.S. refineries are located along the U.S. Gulf Coast, according to Michael Poulsen, oil analyst at Global Risk Management.

Brent crude shuffled between small gains and losses, hit by a stronger dollar, which makes the dollar-priced commodity more expensive to buyers holding other currencies, and concerns about Greece.

Greece’s negotiations with its creditors are at an impasse, and how the issue is resolved is likely to affect eurozone sentiment and the wider economy.

“If the eurozone economy does not pick up despite the stimulus, we may find difficulty for crude demand to pick up from the region,” said Daniel Ang, analyst at Phillip Futures. “Although the eurozone is not the biggest importer of crude oil, in a time of weak demand, every bit matters.”

Prices of both benchmarks are moving back toward the center of the range they have traded in for more than a month. Credit Suisse Group AG said late Monday that U.S. prices are likely stay anchored around $59 a barrel and Brent at $64 a barrel.

“We expect that oil prices stay stuck in a relative narrow range for much of this summer,” the bank’s analysts said in a note. “There is clear evidence that a slow rebalancing of supply and demand is indeed under way.”

In refined products, July gasoline ended up 3.02 cents, or 1.4%, at $2.1293 a gallon on the Nymex, while July diesel gained 1.39 cents, or 0.7%, to $1.8842 a gallon.

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