DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices fell Tuesday, Oct. 28, morning, declining for a third straight trading session, on signs that new U.S. sanctions on Russian oil might only curb Moscow's export revenues without substantially impacting its crude flows.

A widely anticipated rate cut by the U.S. Federal Reserve on Wednesday is also unlikely to help sentiment much in a market more concerned about oil oversupplies. The American Petroleum Institute is due to report inventory numbers for last week at 4:30 p.m. EDT, ahead of U.S. Energy Information Administration data on Wednesday for the same period.

The NYMEX WTI contract for December delivery fell $1.04 to $60.26 bbl, and ICE Brent for December delivery slid $1.05 to $64.55 bbl.

November RBOB gasoline futures retreated $0.0113 to $1.9091 gallon, and front-month ULSD futures slumped $0.0383 to $2.3978 gallon.

The U.S. Dollar Index was little changed, rising 0.042 points to 98.605 against a basket of foreign currencies.

The U.S. Treasury Department announced last week new sanctions aimed at Russian energy firms Rosneft and Lukoil. But traders said history suggests the measures may work in depriving Moscow some of its export revenues in oil, without actual impact on barrels moved through shadow fleets that fell beneath U.S. enforcers' radar.

Global supply additions have far outpaced oil demand growth since the Organization of Petroleum Exporting Countries and its allies started to unwind production cuts earlier this year. The situation is made evident by rapidly swelling inventories over the past three months and record volumes of oil on water.

A hawkish turn in U.S. trade policy with the implementation of hefty import tariffs, particularly on goods flows from China, further amplified demand growth concerns. On Thursday, U.S. President Donald Trump and Chinese President Xi Jinping are set to meet to finalize a deal in the ongoing trade negotiations ahead of the Nov. 1 tariff deadline.