DTN Oil Update
ULSD Futures Climb to 4-Year High on Tight Global Supplies
HOUSTON (DTN) -- Oil futures were little changed on Thursday as market participants remained on the sidelines despite escalating hostilities between the United States and Iran, with traffic through the Strait of Hormuz continuing at a slow pace.
In contrast, ultra-low sulfur diesel (ULSD) futures were bullish on the day, climbing to a four-year high as global supply tightened after Russia halted diesel exports following recent attacks on its refining infrastructure.
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The front-month NYMEX ULSD futures contract rose by $0.1009 to $4.0492 gallon, the highest since June 29, 2022, when it was at $4.0367 gallon, according to DTN data.
On July 14, Ukraine launched drone strikes targeting the Gazprom Neftekhim Salavat complex and the Afipsky oil refinery, two of Russia's major refining facilities, as well as multiple vessels and logistics targets, exacerbating fuel shortages. Following a series of Ukrainian attacks on its energy infrastructure, Russia suspended diesel exports, further tightening an already constrained global diesel market.
In the U.S., a large diesel inventory build last week snapped a 16-week draw streak for total petroleum inventories, according to Energy Information Administration data released Wednesday. Crude oil inventories, however, continued to decline amid strong domestic refiner demand, and gasoline stockpiles, already at a 14-year seasonal low, receded further. At 210.5 million bbl, nationwide gasoline inventories are now 9.6% below year-ago levels and 8.4% below the seasonal five-year average.
Oil exports from the Persian Gulf have slowed amid the most recent military escalation, but a handful of tankers continued to traverse the Strait of Hormuz via the U.S.-protected corridor along the Omani coast, easing concerns over an immediate supply shock.
Traders continued monitoring the developments in the Middle East, as the U.S. launched new strikes on Iran, as well as on an Iran-flagged VLCC that was signaling for the country's main oil export hub at Kharg Island. In reaction, Iran's Islamic Revolutionary Guard Corps reiterated its threat of closing other vital shipping lanes via its proxies, first and foremost Bab-el-Mandeb, which connects the Red Sea to the Gulf of Aden.
NYMEX WTI for August delivery edged down $0.57 to $79.03 bbl. The ICE Brent futures contract for September delivery fell $0.64 to $84.31 bbl. Downstream, the front-month RBOB futures contract dropped $0.0165 to $3.2844 gallon.
The U.S. Dollar Index rose by 0.311 points to 100.585 against a basket of foreign currencies.
