DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures slid for the third consecutive trading day Thursday as Middle Eastern producers rushed to send barrels through the now reopened Strait of Hormuz.

By 08:00 a.m. EDT, ICE Brent for August delivery was down $1.27 to trade near $70.30 barrel (bbl), the lowest since the week before the start of the U.S.-Israeli war on Iran. NYMEX WTI for August delivery fell $1.41 to $67.17 bbl.

Downstream, NYMEX ULSD futures for August delivery retreated $0.0342 to $3.1837 gallon, and front-month RBOB futures slumped $0.0585 to $2.8867 gallon.

The U.S. Dollar Index softened by 0.276 points to 100.88 against a basket of foreign currencies.

The abrupt surge in oil supply has led to a glut in some markets, given that refiner demand is still reeling from the nearly four-month long disruption and emergency stockpiles continue to be released. This imbalance is likely temporary in nature, given that demand is set to recover and inventories will need to be restocked -- all while oil flows from the region are still trailing pre-war levels by some 4 million to 5 million barrels per day (bpd).

Progress in the ongoing U.S.-Iranian peace process also weighed on prices. Qatari officials spoke of "positive progress" in the technical talks between mediators and U.S. diplomats and announced the next round of direct negotiations between Washington and Tehran may take place as early as next Friday, July 10.

In the U.S., meanwhile, crude oil stockpiles continued to decline at a rapid pace. The U.S. Energy Information Administration on Wednesday reported commercial inventories have now fallen to an eight-year low 408.4 million bbl. Total crude oil stocks including those in the Strategic Petroleum Reserve are the most depleted since 1984, and combined oil, LPG and refined product inventories at their lowest since 2003.