DTN Oil Update
Crude Oil Futures Fall More Than 4% on Rising Hormuz Traffic
HOUSTON (DTN) -- Oil futures slid more than 4% on Wednesday as growing vessel traffic through the Strait of Hormuz eased concerns of supply tightness, overshadowing federal data showing weekly U.S. crude inventories falling to a 17-month low last week.
The August NYMEX WTI crude futures contract dipped by $3.17 to $70.04 bbl, after hitting an intraday low at $69.33. It was the lowest level since March 4, when the contract settled at $70.41 bbl. The ICE Brent crude futures contract for August delivery was down by $3.79, or 4.92%, to $73.29 bbl.
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The front-month RBOB futures dropped by $0.0845 to $2.8745 gallon. In contrast, the NYMEX ULSD futures contract for July delivery fell $0.0285 to $3.1261 gallon.
The U.S. Dollar Index strengthened by 0.212 points to 101.385 against a basket of foreign currencies, the highest in more than a year.
Traffic through the Strait of Hormuz picked up further on Tuesday, including three very large crude carriers (VLCCs) carrying a combined 6 million bbl of crude oil. Ship tracking data showed hundreds of laden tankers idling in the Persian Gulf, which could start moving soon as confidence the strait will stay open continued to grow.
The sharp decline in the geopolitical risk premium suggests market participants remain optimistic about the current truce, which gives the U.S. and Iran another seven weeks to negotiate a permanent peace deal.
However, the bearish sentiment in the oil futures market was not offset by continued draws in crude oil inventories. The Energy Information Administration reported on Wednesday that U.S. commercial crude oil stocks declined by 6.1 million bbl to 412.1 million during the week ended June 19. This was the lowest commercial crude oil inventory level since the week ended January 17, 2025, when stocks stood at 411.7 bbl million bbl.
Meanwhile, distillate fuel inventories rose by 3 million bbl to 106.1 million bbl during the reference week and 800,000 bbl above year-ago levels. On the gasoline front, weekly inventories rose by 2.1 million bbl to 216.3 million bbl, while remaining 11.6 million bbl above year-ago levels.
Jet fuel inventories also climbed by 1.3 million bbl to 46.3 million bbl last week and were up 2.1 million bbl from year-ago levels. Refinery utilization slid to 96.1% last week from 96.7% in the prior week. Crude oil inputs into refineries averaged 17.111 million bpd, down by 81,000 bpd from the previous week's 17.192 million bpd.
