DTN Oil Update
WTI Crosses $85 as US Crude Reserves Near 44-Year Low
SECAUCUS, N.J. (DTN) -- Oil prices climbed a fourth straight day Wednesday after data showing emergency stocks of U.S. crude at near 44-year lows.
Continued strains for energy shipping on the Strait of Hormuz, along with a related UAE decision to sever economic ties with Iran, added to the market's upside.
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NYMEX WTI crude for September delivery rose $0.89, or 1.05%, to settle at $85.83 bbl. ICE Brent crude for October delivery gained $0.60, or 0.7%, to close at $91.62 bbl.
Downstream, NYMEX ULSD for September delivery climbed $0.0022, or 0.05%, to close at $4.4523 gallon. NYMEX RBOB for September retreated $0.0466, or 1.41%, to finish at $3.2551 gallon.
On the currency front, the U.S. Dollar Index slid 0.729 points to 98.825 against a basket of currencies by 2:30 p.m. EDT.
Oil prices extended their reach beyond $85 on WTI and $91 on Brent after the Energy Information Administration (EIA) reported that stocks in the U.S. Strategic Petroleum Reserve plunged by 5.3 million bbl to 293.4 million during the week ended Aug. 14. It marked the reserve's lowest levels since December 1982 and suggested the U.S. government would need to refill it at some point -- a positive factor for demand.
While the commercial crude balance itself rose by 4.4 million bbl to 428.8 million last week, it remained 2% below year-ago levels, the EIA reported.
In refined products, the agency said distillate fuel stocks fell by 1.5 million bbl to 105.6 million bbl -- 9% below year-ago levels -- as exports averaged 1.601 million bpd. U.S. diesel has become a major alternative for global buyers squeezed by Russia's fuel ban exports amid the more than four-year long Ukraine war.
Total motor gasoline inventories edged up by 700,000 bbl to 209.4 million bbl, while remaining 6.3% lower year-over-year.
On the geopolitical front, the UAE officially severed all economic and financial ties with Tehran on Tuesday, Aug. 18, following Iranian strikes on Emirates-linked tankers and a regional refinery. Iran countered by warning neighboring nations against offering military assistance to U.S. forces.
Vessel tracking data showed Strait of Hormuz transits remaining in the single digits as Iranian forces targeted unauthorized commercial traffic. Daily tanker crossings through the strategic chokepoint averaged roughly 130 prior to the conflict's outbreak in late February.