DTN Oil Update
Oil Futures Drop; NYMEX WTI Fails to Hold $70 Level
HOUSTON (DTN) -- Oil futures settled lower on Thursday amid expectations of ample supplies and weak demand, as Aug. 1 marks the deadline for the imposition of new punitive tariffs from the Trump administration on multiple nations, and OPEC+ countries are also scheduled to increase oil output.
The front-month NYMEX WTI futures contract dropped by $0.82 to $69.18 bbl, after reaching a $70.41 high earlier, while the September ICE Brent futures contract decreased by $0.71 to $72.53 bbl. The August RBOB futures contract fell by $0.0535 to $2.2156 gallon, while the ULSD futures contract for August delivery dropped by $0.0190 to $2.3995 gallon.
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The U.S. dollar rose by 0.149 points to 99.735 against a basket of foreign currencies.
After a 90-day pause announced in April, the United States is expected to impose additional tariffs ranging from 30% to 50% on several nations -- including India, Brazil and Canada, among others -- that have not reached a deal with the Trump administration.
The escalation of a trade war is expected to affect global economic growth and add inflationary pressure to the U.S. economy.
Additionally, abundant oil supplies are expected to put downward pressure on oil prices, as OPEC+ countries -- including Saudi Arabia, Iraq, Kuwait, Russia, the UAE, Algeria, Oman and Kazakhstan -- are scheduled to increase their crude output by 548,000 bpd starting tomorrow, Aug. 1, in addition to their 411,000 bpd output increase set in July.
A build in commercial crude oil and distillates inventories in the week ended July 25, also contributed to set a bearish tone in the oil futures market today. Crude oil inventories, excluding the Strategic Petroleum Reserve, increased by 7.7 million bbl to 426.7 million bbl last week, while distillate fuel stocks also rose by 3.6 million bbl to 113.5 million bbl, the Energy Information Administration reported Wednesday, July 30.
Plentiful supplies and low global demand expectations are expected to prevail this year, despite additional sanctions recently imposed by the United States and the European Union, on Iranian and Russian oil trade.
Wednesday, the United States Department of the Treasury intensified sanctions on Iran -- the most significant in the last seven years, targeting 50 individuals and entities and more than 50 vessels that transport oil and petroleum products from Iran and Russia.
