DTN Oil Update
Brent Rises on Fresh Gulf Clashes, Diverging With WTI
SECAUCUS, NJ (DTN) -- Global crude benchmarks diverged sharply Tuesday as a fresh escalation in the Middle East conflict reignited global supply worries that boosted Brent futures while deteriorating domestic consumer data placed a lid on U.S. oil futures.
ICE Brent crude for July delivery settled up $3.44, or 3.6%, at $99.58 bbl. NYMEX WTI for July delivery fell $2.71, or x%, to close at $93.89 bbl.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Among refined products, NYMEX ULSD futures for June delivery retreated $0.1732 to $3.7146 gallon, and front-month NYMEX RBOB futures fell $0.2393 to $ 3.2205 gallon.
The U.S. Dollar Index softened by 0.056 points to 99.13 against a basket of foreign currencies by 2:30 p.m. EDT.
The Brent-WTI spread stood at $5.69 bbl at settlement, after being more than $6 apart earlier in the session. Prior to this, the gap was at its widest on May 14, a day after the International Energy Agency (IEA) cautioned in its May monthly report that the ongoing closure of the Strait of Hormuz had knocked a staggering 14.4 million bpd of regional output below pre-war baselines.
Tuesday's widening of the spread came after U.S. military strikes against Iranian mine-laying vessels and radar installations on Monday that effectively dashed hopes for an imminent diplomatic breakthrough in Qatar, prompting immediate risk-premium buying.
The renewed military friction trained a spotlight on depleted global stockpiles following months of persistent maritime chokepoint restrictions. The drawdowns have left international crude inventories at structurally vulnerable levels ahead of the peak summer driving season.
Major investment banks, including JP Morgan, issued fresh warnings Tuesday, indicating that the cumulative loss of more than 1 billion bbl of shut-in Gulf production since February has created a structural deficit that cannot be easily offset by Atlantic Basin exports.
With emergency strategic reserves scheduled to taper off by July, physical traders are rapidly pricing in a severe structural shortfall. This underlying inventory anxiety ensures that while U.S. recession fears drag on WTI, Brent remains heavily anchored by the absolute reality of missing physical wet barrels.
WTI's weakness was partly due to a slide in U.S. consumer confidence, as The Conference Board's flagship index fell 0.7 points to 93.1 in May, underscoring the impact of persistent price shocks and soaring domestic fuel costs on household sentiment.