DTN Oil

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange deepened losses in the afternoon trade session Tuesday, with West Texas Intermediate sliding below $68 bbl after the latest macroeconomic data for the United States showed the economy is performing better than anticipated at the end of the second quarter, paving the way for the Federal Reserve to continue raising interest rates.

Also on Tuesday, oil traders positioned ahead of the release of weekly inventory data beginning with the industry survey from the American Petroleum Institute scheduled for 4:30 PM ET, followed by official data from the U.S. Energy Information Administration Wednesday morning.

U.S. commercial crude-oil stockpiles are expected to have declined by 1.8 million bbl for the week ended June 23, with estimates ranging from a decrease of 4.5 million bbl to an increase of 1.7 million bbl. The expectation for a drawdown comes despite a preliminary U.S. Department of Energy report indicating it disbursed another 1.4 million bbl of crude from the nation's Strategic Petroleum Reserve last week. That would bring those emergency crude supplies down to a 349 million bbl fresh 40-year low.

Gasoline inventories are expected to have fallen by 400,000 bbl from the previous week, with stocks of distillates, which are mostly diesel fuel, are expected to rise by 400,000 bbl from the previous week. Refinery use likely rose by 0.1% from the previous week to 93.2% of capacity.

On the session, WTI August futures dropped back $1.67 to settle at $67.70 bbl and international crude benchmark Brent for August delivery fell back $1.92 bbl to $72.26 bbl. The next-month delivery September contract settled the session with a $0.25 bbl premium to the expiring contract, as Brent's backwardation along the forward curve continues to unwind.

NYMEX RBOB July futures declined $0.0207 to $2.5168 gallon, with next-month August futures finishing the session at $2.4221 gallon. NYMEX ULSD July contract declined $0.0398 to $2.3990 gallon, and the August contract fell to $2.3716 gallon. ICE Brent August, NYMEX RBOB and ULSD July futures expire Friday (6/30) afternoon.

In financial markets, the U.S. dollar index weakened 0.2% against a basket of foreign currencies to finish the session at 102.127 after U.S. durable goods orders released this morning climbed for the third straight month, up 1.7% in May. The recent increase in orders might be a sign that manufacturers have found a bottom, at least temporarily, after slumping in 2022. Orders rise in an expanding economy and shrink in a contracting one.

Additionally, the U.S. consumer confidence index in early June leapt to a 17-month high on waning inflation and fewer recession worries, showed data released from Conference Board Tuesday morning. Consumer confidence tends to signal whether the economy is getting better or worse. The index is still well below the levels associated with a healthy economy.

Internationally, investors continue to assess the fallout from the dramatic but short-lived mutiny inside Russia where Evgeny Prigozhin, chief of Wagner mercenary group, directly challenged the 23-year regime of Vladimir Putin, taking a swipe at corrupt and incompetent leadership of Russian army. Russia remains one of the world's top oil-producing countries and disruption to those flows could impact oil prices. Goldman Sachs said in a Monday note that so far, the uprising's impact on oil prices is limited because spot fundamentals haven't changed. Yet RBC Capital Markets cautioned the risk of further civil unrest in Russia "must be factored into our oil analysis."

Russia produces more than 10 million bpd of oil or one in ten barrels globally. Despite Western sanctions imposed on Moscow in the wake of its full-scale invasion of Ukraine in February 2022, Russia exports roughly 80% of produced volumes, with countries like India, China and Turkey emerging as major buyers of Russian oil.

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