DTN Oil Update
Oil Prices Slip on Israel-Iran Truce, Weak Demand Signals
VIENNA (DTN) -- Oil futures slipped Tuesday morning after Israel and Iran agreed to halt attacks on each other, reversing course from the previous trading day which saw a brief price rally sparked by a short-lived flareup of hostilities between the countries.
By 8:30 a.m. ET, ICE Brent for August delivery was down $1.27 to trade near $92.98 bbl, and NYMEX WTI for July delivery fell $1.71 to $89.59 bbl.
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Downstream, NYMEX ULSD futures for July delivery retreated $0.0180 to $3.5819 gallon, and front-month NYMEX RBOB futures were little changed, down $0.0004 to $3.0702 gallon.
The U.S. Dollar Index softened by 0.33 points to 99.695 against a basket of foreign currencies.
Prices jumped more than 5% in early morning trade Monday following this weekend's exchange of missile strikes between Israel and Iran, the first since the declaration of a ceasefire in early April. Later that day, both sides said that they would halt attacks for now, but did not rule out future strikes.
China's National Bureau of Statistics, meanwhile, on Tuesday reported that the country's crude oil imports last month slumped to the lowest in more than eight years, and refinery runs were at their lowest since COVID-induced lockdowns slashed fuel demand. Chinese oil imports and refinery throughputs have long served as a bellwether for global demand growth.
Domestic fuel consumption data published by the NBS also flashed bearish demand signals. Gasoline and diesel retail sales in May slipped more than 5% year-on-year, despite a slight drop in gasoline prices at the pump.
Amid the dearth of deliveries from the Middle East caused by the largest supply disruption in history and limited alternatives, Chinese refiners were forced to slash runs and rely on commercial crude stockpiles, which have over the past two months dwindled rapidly.
The global reliance on inventories has kept oil prices from soaring even higher. Worldwide oil stockpiles, which were at a five-year high at the beginning of the month, have plummeted to the lowest in eight years. The International Energy Agency has repeatedly warned that inventories could hit a "red zone" by July or August should the Hormuz supply crisis not be resolved, which would force refiners to cut back on operations, raising the risk of fuel shortages.