DTN Oil Update
Oil Prices Soften as Russian Supply Risks Cap Losses
VIENNA (DTN) -- Oil prices softened Wednesday morning, halting a three-day rally spurred on by concerns over Russian crude oil supply as Ukraine intensified its attacks on oil infrastructure.
NYMEX-traded WTI for October delivery fell $0.20 to trade near $64.32 bbl, and ICE Brent for November delivery softened $0.19 to $68.28 bbl.
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October RBOB gasoline futures slid $0.0030 to $2.0386 gallon, and the front-month ULSD contract retreated $0.0175 to $2.3760 gallon.
The U.S. Dollar Index strengthened by 0.147 points to 96.395.
Ukrainian strikes on Russian refineries, fuel depots and pipelines feeding export terminals have dented oil supply, although the extent of the damages and their precise impact on production remained elusive.
According to a Bloomberg report, Goldman Sachs estimated that Ukrainian attacks have taken offline some 300,000 bpd of Russian refining capacity since the beginning of August. On Tuesday, a Ukrainian attack sparked fires at the 140,000-bpd capacity Saratov refinery.
Meanwhile, the European Union looked to more closely coordinate sanctions with the United States and speed up the phase-out of Russian oil imports.
The EU on Monday postponed the implementation of the 19th sanctions package against Russia after U.S. President Donald Trump conditioned fresh U.S. sanctions on NATO and EU countries ceasing all purchases of Russian oil.
The reviewed package may include secondary sanctions on buyers of Russian oil, and, according to a social media statement by European Commission President Ursula von der Leyen, will contain a plan to more quickly phase out purchases of Russian energy. While Russian flows to Europe have plummeted since the invasion of Ukraine, two landlocked NATO and EU countries, Slovakia and Hungary, are currently exempt from the EU embargo on Russian oil imports, given their limited supply alternatives. Under their current agreement, EU countries have until 2028 to completely faze out Russian energy purchases.
Markets also seemingly shrugged off an industry report showing declining U.S. crude oil and gasoline stockpiles. The American Petroleum Institute on Wednesday reported commercial crude oil inventories fell by 3.42 million bbl last week, with stocks at the Cushing, Oklahoma tank farm, delivery point for WTI futures, shrinking by 379,000 bbl. Counteracting the draws, API saw a 1.906 million bbl build to distillate fuel oil stocks in the week ending Sept. 12. Official government oil inventory data from the U.S. Energy Information Administration is scheduled for 10:30 a.m. EDT release today.