DTN Oil Update
Oil Drops on Potential Iran Deal, Global Glut Projections
VIENNA (DTN) -- Oil futures fell sharply Thursday morning after U.S. President Trump hinted at a possible Iran nuclear deal, which would likely see the removal of some sanctions on Iranian oil trade. The International Energy Agency warning of an oversupplied global crude oil market and the U.S. Energy Information Administration confirming last week's surprise crude oil inventory build added to bearish sentiment.
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NYMEX-traded WTI for June delivery was down $1.50 bbl to trade near $61.65 bbl, and ICE Brent for July delivery fell $1.54 bbl to $64.55 bbl.
June RBOB gasoline futures softened by $0.0457 to $2.1243 gallon, while the front-month ULSD futures contract was down $0.0512 to $2.1549 gallon.
The U.S. Dollar Index softened by 0.333 points to 100.540.
The U.S. President on Thursday said that the two parties were "getting close to maybe doing a deal." This followed four rounds of talks in Oman and several new U.S. sanctions on Iranian oil, gas and LPG producers and shippers.
The IEA, in its most recent oil market report published Thursday, projected global oil demand to slow from 990,000 bpd in the first quarter to 650,000 bpd for the rest of the year. At the same time, global supply is now expected to rise much faster than was anticipated only a month ago, as OPEC+ seems committed to rolling back output curbs. The forecasted growth in global supply this year, now at 1.6 million bpd, is at more than double the anticipated demand growth rate of 740,000, leading to swelling inventories.
Prices were also pressured by EIA data showing U.S. commercial crude oil inventories unexpectedly rising last week. The reported 3.5 million bbl build was in line with the American Petroleum Institute's 4.29 million bbl estimate from Tuesday.