Energy Futures Post Mixed Close Tuesday

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 posted mixed results in afternoon trade Tuesday, with the July West Texas Intermediate contact expiring a tad above $73 barrel (bbl) while traders positioned ahead of weekly inventory data from the American Petroleum Institute that is expected to show a hefty drawdown from U.S. crude oil inventories accompanied by yet another build in petroleum products supplies during the week ended June 18.

At expiration, NYMEX July WTI futures fell $0.60 to $73.06 bbl after registering the highest settlement since October 2018 on the spot continuous chart on Monday. The August contract shed $0.27 for a $72.85 bbl settlement in the backwardated market. ICE August Brent crude slipped slightly lower to settle at $74.81 bbl, reversing from an overnight $75.30 bbl high.

In contrast with the crude contracts, oil product futures advanced more than 1%, with July RBOB futures gaining 2.74 cents to $2.2243 gallon and July ULSD futures advancing 2.42 cents to $2.1510 gallon.

U.S. commercial crude oil inventories are seen to have fallen by 4.1 million bbl in the week ended June 18, with estimates ranging from a decline of 1.1 million bbl to 7 million bbl. Gasoline stockpiles are expected to have risen by 800,000 bbl from the previous week, while stocks of distillates are anticipated to have gained 600,000 bbl last week.

The American Petroleum Institute is scheduled to release its weekly inventory report 4:30 p.m. EDT, followed by official data from the Energy Information Administration on Wednesday.

In broader markets, equities on Wall Street advanced and the U.S. dollar reversed earlier gains to end below 92 at 91.751 after Federal Reserve Chairman Jerome Powell told the House Select Subcommittee on the Coronavirus Crisis the economy has shown "sustained improvement," but the recovery has accelerated inflation.

"A pretty substantial part, or perhaps all, of the overshoot in inflation comes from categories that are directly affected by the reopening of the economy such as used cars and trucks," Powell said Tuesday in response to a question before the subcommittee.

Fed's chief said inflation has increased "notably" in recent months but expects rising price pressure to only be temporary and to eventually ease back to the central bank's 2% target.

Powell's remarks followed a meeting of the Fed's policymaking committee last week when officials indicated they could boost interest rates and begin tapering asset purchases sooner than expected.

New York Fed President John Williams told Bloomberg on Tuesday that an interest rate increase was "still way off in the future," adding that the attention now "really is on the timeline for tapering."

On the geopolitical front, several Iranian news agencies and websites claimed Tuesday that the U.S. government had seized several Iranian media websites and sites belonging to groups affiliated with Iran such as Yemen's Houthi movement. The claims follow Iran's presidential elections on June 18 that ushered in a hardliner, elevating Chief Justice Ebrahim Raisi to the presidency; he will be sworn in in early August.

Raisi will assume power following eight years with Hassan Rouhani as president, a moderate who oversaw the multilateral nuclear deal reached with the United Kingdom, France, Germany, Russia, China, and the European Union reached in 2015.

Raisi, who is said to be in line to become Iran's Supreme Leader, staked out a hardline position Monday in his first news conference following his election victory. He said he would not meet with U.S. President Joe Biden and ruled out any further negotiations with the West over Tehran's ballistic missile program and support for regional militias.

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

Liubov Georges