DTN Oil Update
Oil Prices Rise on Putin Remarks; ULSD Falls to 6-Week Low
VIENNA (DTN) -- Crude oil and gasoline futures rose Wednesday, Dec. 3, morning after comments by Russian President Vladimir Putin weighed on hopes of a quick diplomatic solution to the war in Ukraine. A U.S. inventory report by the American Petroleum Institute showing across-the-board builds limited gains. Diesel prices, meanwhile, continued to edge lower amid surging U.S. inventories.
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The NYMEX WTI contract for January delivery rose $0.57 bbl to $59.21 bbl, and ICE Brent for February delivery advanced $0.52 to $62.97 bbl.
January RBOB gasoline futures rose $0.0114 to $1.8420 gallon. Front-month ULSD futures, in contrast, softened $0.0171 to $2.2960, the lowest since Oct. 23.
The U.S. Dollar Index plunged 0.391 points to 98.905 against a basket of foreign currencies.
A diplomatic push by the U.S. to end the war in Ukraine removed some of the geopolitical risk premium to oil prices in recent days. On Tuesday, President Putin called European demands unacceptable and announced Russia will take measures against tankers of countries which help Ukraine. This came after the fourth Russia-linked tanker was struck in less than a week.
The U.S.-led initiative took the wind out of a diesel rally which was sparked by the European Union announcing plans to ban imports of fuels made from Russian crude oil starting Jan. 1, raising supply concerns against a backdrop of already low inventories. Front-month ULSD futures have softened by 15% since peaking at a five-month high in mid-November.
An API report released Tuesday showed petroleum inventories in the U.S. expanded last week. Commercial crude oil inventories grew by 2.48 million bbl in the week ended Nov. 28, according to API data, while gasoline and distillate fuel oil stocks recorded another weekly build. The reported 2.88 million bbl build to diesel and fuel oil inventories further added pressure to ULSD. Official U.S. government inventory data will be released by the Energy Information Administration at 10:30 a.m. EST today.