DTN Oil Update
ULSD Futures Hit 7-Week Low on High Stocks Outlook
HOUSTON (DTN) -- Oil prices settled lower on Tuesday, reversing gains from the previous trading session, after U.S. President Donald Trump postponed by another three months the imposition of trade-prohibitive tariffs on imported Chinese goods.
The bearish sentiment was also supported by OPEC and Energy Information Administration's Short-Term Energy Outlook (STEO) monthly reports predicting ample global supplies and lower oil prices for this year.
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The front-month ULSD futures contract for September delivery reached a seven-week low, falling by almost 5cts to $2.2416 gallon, September RBOB gasoline futures softened by $0.0023 to $2.0739 gallon.
Upstream, the NYMEX WTI futures contract for September delivery fell by $0.72 to $63.24 bbl while ICE Brent for October delivery slid by $0.45 to $66.18 bbl.
The U.S. Dollar Index softened by 0.471 points to 97.89 against a basket of foreign currencies.
On Monday, Aug. 11, President Trump extended a trade truce with China until Nov. 10. The United States and China recently agreed to drop reciprocal tariffs to 10% from 145%. As the effect of tariffs in oil futures has diminished, market participants are now focusing on global economic data reports.
OPEC revealed a 335,000-bpd month-on-month output increase in July, according to its Monthly Oil Market Report released this morning. The increase was led by OPEC members Saudi Arabia and the United Arab Emirates. The organization also maintained its 2025 global oil demand growth forecast unchanged at 1.29 million bpd, and increased growth expectations for next year to 1.38 million bpd.
Meanwhile, the July EIA STEO report predicts lower crude prices due to high inventory levels following OPEC+'s decision to accelerate output hikes.
The STEO also revised its forecast for Brent crude oil price downward from an average of $71 bbl to $58 bbl for the fourth quarter.
Tuesday morning, the U.S. Bureau of Labor Statistics reported that the consumer price index in July was unchanged from June at 2.7% year-on-year, while the core CPI, which excludes price-volatile goods like food and energy, accelerated to 3.1% year-on-year. Sticky core inflation is expected to reduce the odds of a rate cut.
