DTN Oil Update
Oil Prices Head for Large Weekly Loss
SECAUCUS, N.J. (DTN) -- Oil prices fell about 1% or more on Friday morning as reports of a potential deal to end the Iran war and reopen the Strait of Hormuz to energy shipping put crude futures on track to their sharpest weekly loss since early April.
By 8:20 a.m. EDT, NYMEX WTI crude for July delivery was down $1.17, or 1.3%, to $87.73 bbl. ICE Brent for July delivery fell $1.48, or 1.6%, to $92.23.
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For the week, both WTI and Brent were headed for a loss of more than 9%, their most since the week ended April 17.
While crude prices remain elevated compared to pre-war levels of nearly $70 bbl, long liquidation is accelerating on both NYMEX and ICE as players price in a resumption of commercial shipping on Hormuz, analysts said.
Among refined products, NYMEX ULSD futures for June delivery retreated by $0.0275 to $3.5912 gallon. June RBOB slipped by $0.0407 to $3.1445 gallon.
The U.S. Dollar Index was virtually changed, rising 0.04 points to 99.005 against a basket of currencies.
Friday's drop in oil prices came on the back of reports that negotiators have finalized a memorandum of understanding for a 60-day ceasefire extension to reopen Hormuz, which Tehran has effectively blockaded since the start of U.S.-Israeli airstrikes on Iran at end-February. However, the pact remains contingent upon approvals from U.S. President Donald Trump and Iranian Supreme Leader Mojtaba Khamenei.
ExxonMobil warned Thursday, May 28, that oil inventories could fall to record low levels in coming weeks, forcing prices to spike and curb demand.
U.S. commercial crude inventories declined for a fifth consecutive week, while distillate stocks plunged to their lowest level since 2003, according to Energy Information Administration data for the week ended May 22. Commercial crude stockpiles fell by 3.3 million bbl to 441.7 million bbl, while gasoline inventories dropped to a fresh six-month low, falling by 2.6 million bbl to 211.6 million bbl.