DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures were mixed in a choppy morning session Wednesday amid uncertainty over rumored mediation efforts to end the U.S.-Iran war. An industry report showed commercial crude oil stockpiles in the U.S. posting another large decline was offset by expectations of more releases from strategic reserves.

By 9:00 a.m. EDT, ICE Brent for December delivery was down $0.62 to trade near $108.17 bbl, and NYMEX WTI for December delivery fell $0.48 to $97.34 bbl.

Downstream, NYMEX ULSD for November delivery slipped $0.0751 to $4.8499 gallon, and front-month RBOB futures steadied, up $0.0021 to $3.1193 gallon.

The U.S. Dollar Index was little changed, down 0.02 points to 101.505 against a basket of foreign currencies.

Oil prices soared to five-month highs Tuesday before reversing course after debunked reports of an imminent diplomatic settlement of the nearly eight-month-old conflict that has led to the largest oil supply disruption in history and globally plummeting inventories. Tehran denied these rumors, but confirmed that indirect negotiations via third party mediators were ongoing.

Futures relinquished some of their earlier gains this morning after Reuters reported that the U.S. Department of Energy was set to release 315,000 bbl of heating oil from emergency reserves in order to tame middle distillate prices. The release from the Northeast Home Heating Oil Reserve, which holds about one million bbl of ultra-low sulfur diesel, will come in the form of loans and is expected to be completed by Nov. 13. Commercial distillate fuel oil stocks in the Northeast have barely rebounded since hitting an all-time low at the end of August, and are currently at their seasonally lowest on record, trailing year-ago levels and the five-year seasonal average by 41% and 45%, respectively, U.S. Energy Information Administration (EIA) data showed.

Commercial crude oil inventories in the U.S. have until recently not experienced the precipitous decline recorded in refined fuel stockpiles, largely due to the release of nearly 133 million bbl of crude oil from the Strategic Petroleum Reserve. Two weeks ago, crude stocks posted a hefty decline that came on the back of hurricane-induced production shut-ins but also coincided with the SPR supply stream drying up. The American Petroleum Institute late Tuesday reported across-the-board draws to commercial inventories last week, including a nearly 5 million bbl decline in crude oil stocks despite largely restored offshore production. Official government data from the EIA is scheduled for 10:30 a.m. EDT release Wednesday.

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