Oil Tumbles to Two-Week Lows

OLD BRIDGE, N.J. (DTN) -- New York Mercantile Exchange oil futures and Brent crude oil on the Intercontinental Exchange tumbled to two-week lows Tuesday ahead of weekly supply data, as overbought pressure following the April price run-up triggered profit taking on the first day of May.

"The technicals are dominating the fundamentals for the moment," said David Thompson, executive vice president for Powerhouse, a commodity hedge and trade advisory. "We're basically seeing the lack of another bullish fundamental needed to push it higher."

A strengthening U.S. dollar, which rallied to a four-month high Tuesday, also weighed on West Texas Intermediate futures.

Tueday's pullback follows Monday's rallies to fresh multiyear highs for Brent and ULSD and to an eight-month high for RBOB gasoline in response to Israeli Prime Minister Benjamin Netanyahu's presentation showing an ambitious Iranian nuclear weapons program in defiance of the nuclear accord reached with the five permanent members of the United Nations Security Council and Germany in 2015.

The rally faded as Netanyahu's presentation wasn't seen prompting a harsher course regarding the agreement by European allies, although U.S. President Donald Trump is now more likely to withdraw the United States from the agreement by his May 12 deadline. A U.S. withdrawal would re-impose sanctions on Iran, including on crude exports.

NYMEX June WTI crude settled at a $67.25 two-week low, down $1.32 bbl, while ICE July Brent crude oil, which became the prompt month contract today, slid $1.56 bbl to $73.13 bbl.

NYMEX June ULSD declined $0.0496 to settle at $2.0997 gallon, after touching a fresh 38-month spot high on Monday at $2.1674. June RBOB gasoline at settlement declined $0.0432 to $2.0876 gallon, after the now expired May contract settled at an eight-month spot high of $2.1292 gallon on Monday.

Tuesday's decline comes ahead of weekly data from the American Petroleum Institute due out Tuesday afternoon and Wednesday's midmorning release by the Energy Information Administration.

Energy Management Institute's Dominick Chirichella expects U.S. commercial crude stocks to have increased 1.3 million bbl during the week-ended April 27, and estimates gasoline stocks will show a 1.6 million bbl decline. For distillate fuels, Chirichella projects stocks to have been drawn down for a fourth straight week through April 27, eyeing a 1.8 million bbl decrease after the prior week's 2.6 million bbl draw.

Brian Whary can be reached at Brian.Whary@dtn.com