Oil Futures Slip After EIA Data, Progress in US-Iran Talks

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange slipped in early trade Thursday following two down sessions, pressured by the Energy Information Administration's latest weekly inventory report released Wednesday showing a modest build in U.S. commercial crude and gasoline stockpiles, and as sentiment sours on concern over a weaker-than-expected recovery in global oil demand after India reported record high COVID-19 infections.

Near 7:30 a.m. ET, the NYMEX West Texas Intermediate June contact fell 34 cents to $61.02 per barrel (bbl), while ICE Brent crude for June delivery declined 40 cents to below $65 bbl. NYMEX May ULSD futures dopped 0.46 cent to near $1.8491 gallon and May RBOB futures pulled back 0.78 cent to $1.9756 gallon.

U.S. equity futures also drifted lower Thursday and the U.S. Dollar Index posted modest losses against a basket of foreign currencies as financial markets around the world appear sensitive to prospects of lower economic growth amid a stubborn resurgence in coronavirus infections.

Domestically, weekly jobless claims, set for an 8:30 a.m. ET release, will likely show continued improvement in the labor market with expectations for initial filings for unemployment insurance to be near 600,000 last week as states continue to ease business restrictions that allow for more hiring.

Oil futures are set to extend the recent declines into a fourth consecutive session Thursday after government data released earlier this week showed commercial crude stocks had climbed 593,984 bbl in the week ended April 16 that ran contrary to analyst expectations for a 2.4 million bbl draw. Refinery runs remained unchanged from the previous week at a 13-month high 85% utilization rate. The EIA data was mixed for refined products inventories, with gasoline stocks edging up 84,992 bbl and distillate stocks falling 1.07 million bbl last week. Implied gasoline demand data was bullish, with gasoline supplied to the U.S. market above 9 million barrels per day (bpd) at 9.1 million bpd for the first time since August 2020 and for only the second time since initial lockdowns more than a year ago.

Traders are keeping a close eye on India's skyrocketing COVID-19 cases this week after Prime Minister Narendra Modi hinted at further restrictions on mobility and businesses should infections continue to rise but so far has ruled out the nationwide lockdown. India reported a record 295,158 cases on April 21, according to data from John Hopkins University, even as large parts of country remained under lockdown.

Nearby, Japan is considering placing Tokyo and Osaka under a state of emergency that would shut down nonessential businesses and restrict mobility.

The market is also watching talks between the United States and Iran over Iran's nuclear program which could lead to an end to U.S. sanctions on Iranian oil exports. Market observers note Iranian oil exports have already increased in 2021, with the Organization of the Petroleum Exporting Countries reporting Iranian crude production up 282,000 bpd or 14% in the first quarter averaging 2.304 million bpd in March.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges