DTN Oil Update
Oil Ends Off Highs as Mideast Relief Blunts US Draws
SECAUCUS, N.J. (DTN) -- Crude futures rebounded Wednesday from three-month lows, spurred partly by another large drawdown in U.S. crude inventories, although signs of global supply returning from de-escalation in the Middle East conflict saw the market settling off its highs.
NYMEX WTI for July delivery settled up $0.74, or 1%, at $76.79 bbl after rallying to $80.03.
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ICE Brent for August delivery rose $0.59, or 0.8%, at $79.55 bbl, after a peak at $82.97. Downstream, NYMEX ULSD futures for July climbed $0.0244 to $3.1946 gallon, while NYMEX RBOB for July advanced $0.0291 to $2.9096 gallon.
The U.S. Dollar Index rose 0.516 points to 99.795 against a basket of foreign currencies.
WTI and Brent futures rose as the U.S. Energy Information Administration reported that commercial crude inventories fell for an eight straight week, hitting 8-month lows.
The 8.3 million bbl drop during the week ended June 12 matched the figure cited by the American Petroleum Institute for the same period and exceeded market expectations for a 3.6-4.6 million bbl drop. The drop was even larger if the 9 million bbl deficit in the Strategic Petroleum Reserve was added to the mix, bringing total crude inventories to their lowest levels since March 1985.
Crude storage at the Cushing, Oklahoma delivery hub also fell, by 1.6 million bbl, intensifying fears that prompt supplies were hitting critical operational minimum floors ahead of contract expiry. On the crude processing side, refinery crude runs jumped by 230,000 bpd, pushing national utilization up 1.4 percentage points to 96.7% as refiners ran through more barrels to feed summer demand.
Among refined products, gasoline stocks fell by 906,000 bbl on a massive 481,000 bpd surge in motor fuel consumption, while distillates rose by a minor 1 million bbl. Offsetting the EIA data were media reports that three Iranian supertankers had exited the U.S. naval blockade, carrying nearly 5 million bbl of crude.
That reinforced some trade assessments that the backlog of floating storage in the Persian Gulf since early March could eclipse U.S. inventory draws. It also caused long-term trade algorithms and macroeconomic desks to focus on the projected 8 million bpd surge in global supply capacity and 2 million bpd in annualized 2027 demand growth.
As such, selling the back-end of the crude price dampened enthusiasm in prompt month trading of WTI and Brent. The Federal Reserve's decision to hold U.S. interest rates unchanged for a fourth straight month, citing continued inflationary pressures from the outcome of the Middle East, was another factor keeping a check on Wednesday's rise in energy futures.