DTN Oil Update
Oil Futures Fall Despite Multi-Year US Crude Stocks Draw
HOUSTON (DTN) -- Crude oil futures extended losses Wednesday despite the largest weekly draw in U.S. crude inventories in nearly eight years, as reported by the Energy Information Administration. Investors instead focused on expectations that indirect negotiations between the U.S. and Iran aimed at ending hostilities were making progress.
White House envoys arrived in Qatar on Tuesday to resume technical talks, the first step toward a potential permanent peace deal. The discussions were held indirectly through Qatari mediators, with no direct engagement between U.S. and Iranian officials. Although little information has emerged from the negotiations, multiple media outlets, citing an anonymous U.S. source, reported technical talks were progressing.
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Meanwhile, ship tracking data revealed that traffic through the Strait of Hormuz rose on Tuesday for the first time since last week's Iranian attacks on two vessels. Inbound traffic into the Persian Gulf increased sharply, showing growing confidence among shippers that the chokepoint will remain open and safe for transit.
Still, analysts expect it will take weeks before the flow of Persian Gulf supplies eases inventory pressures. Meanwhile, commercial crude oil stocks in the U.S. have been depleting rapidly amid record high exports.
The Energy Information Administration reported Wednesday that U.S. commercial crude oil inventories declined for a 10th consecutive week, during the week ended June 26, along with gasoline stocks and a rise in distillate fuel and jet fuel in the same period.
Commercial crude oil inventories fell by 3.8 million barrels (bbl) to 408.4 million bbl during the week, the lowest since the week ended September 28, 2018, when stocks stood at 403.9 million bbl. Year-over-year crude oil inventories dropped 10.6 million bbl, or 2.5%. On Tuesday, the American Petroleum Institute said nationwide stockpiles shrank by 6.1 million bbl last week.
The front-month NYMEX WTI futures contract fell $1.23 to $68.271 bbl, while ICE Brent futures contract for August delivery dipped $1.58 to $71.37 bbl.
Downstream, NYMEX ULSD futures for August delivery edged down $0.0172 to $3.2119 gallon, in contrast, the front-month RBOB futures rose $0.0432 to $2.9381 gallon.
The U.S. Dollar Index strengthened by 0.198 points to 101.155 against a basket of foreign currencies.
