DTN Oil Update

Barani Krishnan
DTN Refined Fuels Market Reporter

SECAUCUS, N.J. (DTN) -- Oil futures tumbled almost 2% Thursday, Oct. 9, reversing gains from last week. The decline came after Israel and Hamas signed a ceasefire and hostage return deal, easing some of the geopolitical risk that had provided support to crude markets.

The bearish sentiment was also fueled by data showing crude inventories ballooning on the U.S. Gulf Coast last week. This potentially creates a regional supply glut, even as refiners aggressively process crude at high run rates.

NYMEX-traded WTI crude for November delivery settled down $1.04, or 1.7%, to $61.51 bbl. Just a day ago, WTI hit a one-week at $62.92, rebounding from last week's four-month low of $60.40 pressured by worries of oversupply.

ICE Brent for December delivery slumped $1.08 to $65.17 bbl. On Wednesday, Oct. 8, Brent scaled a one-week peak of $65.54, rebounding from the four-month trough of $64 seen a week ago.

The drop in oil futures weighed across the NYMEX petroleum complex.

November RBOB gasoline futures fell by $0.0300 to $1.8795 gallon, and front-month ULSD futures lost $0.0145 to trade at $2.2768 gallon.

The U.S. Dollar Index jumped 0.540 points to 99.18, reaching its highest since late July against a basket of foreign currencies.

Oil prices began Thursday steadily as the market initially took the developments in Gaza in its stride. But as the day progressed, heavy selling set in.

Weekly inventory data from the Energy Information Administration, meanwhile, showed U.S. commercial crude stocks rising by 3.7 million barrels to 420.3 million bbl during the week ended Oct. 3.

Crucially, the surge was heavily concentrated in the U.S. Gulf Coast (PADD 3), where stocks have jumped more than 10 million bbl in just two weeks, including a 6.2 million bbl jump last week alone.

The rapid build is highly unusual as Gulf Coast inventories typically draw down over the summer months and into fall as refiners try to meet fuel demand.