OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled higher Tuesday. This comes ahead of the release of weekly data from the American Petroleum Institute, while sabre rattling by Iran in reaction to reimposed U.S. sanctions lends upside support for crude prices.
U.S. commercial crude oil inventories are expected to have been drawn down 3.1 million bbl during the week-ended July 20 according to a Bloomberg survey, with 900,000 bbl of the decline expected at Cushing, Oklahoma, the delivery location for West Texas Intermediate futures. NYMEX September WTI futures settled 63 cents higher at $68.52 bbl, while ICE September Brent crude futures rose 38 cents to $73.44 bbl. August RBOB gasoline futures rose a marginal 0.42 cents to settle at $2.0956 gallon, while the August ULSD contract gained 1.46 cents with a $2.1326 settlement.
API will release its weekly data at 4:30 PM ET Tuesday, with the Energy Information Administration set to issue its report 10:30 AM ET Wednesday.
Iran's threat to disrupt traffic through the Strait of Hormuz, a critical waterway for oil transport between Iran and Saudi Arabia, also lent upside price support. Analysts said a disruption would threaten the movement of about 30% of current global oil traffic.
The heightening hostility comes ahead of U.S. sanctions set to take effect Nov. 4, with the previous round of U.S. sanctions from 2012 to 2015 cutting about 1.2 million bpd of Iranian oil exports while damaging Iran's economy.
Iranian crude exports dropped by 230,000 bpd in June from May, according to the International Energy Agency.
Countering lost Iranian supply is a gradual recovery in oil exports from Libya, which tumbled in June amid civil war. Oil production at Libya's Waha field rose to 130,000 bpd from 100,000 bpd last week as loading resumed at Es Sider port, analysts said. Shut-in oil has also began to flow from the North Sea following last week's oil worker strike in Norway.
Saudi Arabia, which previously said it would ramp up production to nearly 11.0 million bpd this month, has said there's no need for the added supply, maintaining production at the June rate of 10.5 million bpd this month. Brent crude futures recent move into contango after nearly 11 months of backwardation supports the Saudis' analysis.
Brian Whary can be reached at firstname.lastname@example.org
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.