DTN Oil Update
WTI at $55 Amid Venezuela Blockade, US Crude Draw
SECAUCUS, N.J. (DTN) -- Fuel to oil futures rebounded Wednesday, Dec. 17, from the multi-year lows of the prior session following a U.S. naval blockade on OPEC producer Venezuela and the Energy Information Administration's report of a second straight weekly draw in domestic crude inventories.
Adding to the bullish sentiment were media reports that Washington was considering targeting Russia's shadow fleet of crude tankers if Moscow rejects a U.S. peace proposal for Ukraine further added to the risk premium in oil, traders said.
NYMEX WTI for January delivery settled up by $0.67, or 1.2%, at $55.94 bbl. It had dropped by 2.7% in the prior session, breaking the key $55 bbl support to hit a 2021 low of $54.89 bbl.
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ICE Brent, which had broken key $60 support a day earlier, rose by $0.84, or 1.4% on Wednesday to $59.76 bbl on its January futures contract.
Refined products also rallied. NYMEX front-month gasoline climbed by $0.0162 to $1.6971 gallon after a drop beneath $1.60 in the prior session. Front-month ULSD advanced by $0.0248 to $2.1534 gallon.
The run-up in fuel and crude prices was triggered mainly by U.S. President Donald Trump's announcement late Tuesday of a U.S. naval blockade of all sanctioned oil tankers into Venezuela, which, according to cargo surveyors, handled between 921,000 and 967,000 bpd of exports in November, mostly headed for China.
Under the order, any blacklisted tanker that tries to enter or leave Venezuela risks being boarded by the U.S. Navy or Coast Guard, having its oil seized or being forced to turn around. The blockade comes after U.S. forces seized a loaded Venezuelan oil tanker last week.
Separately, Bloomberg reported that the U.S. was preparing a fresh round of sanctions against Russia's energy sector, including the targeting of its shadow fleet, to dial up the pressure on President Vladimir Putin to accept a White House-engineered peace agreement on Ukraine.
U.S. commercial crude stocks fell by 1.3 million bbl to 424.4 million bbl, extending the prior week's drop of 1.8 million bbl, the EIA said in its Weekly Petroleum Status Report.
Stocks at Cushing, Oklahoma, the delivery point for WTI futures and a key determinant for pricing, fell by 700,000 bbl to 20.9 million bbl. In the previous week, Cushing balances had fallen by 300,000 bbl.
Meanwhile, distillate fuel oil inventories rose by 1.7 million bbl to 118.5 million bbl, adding to the prior weekly growth of 2.5 million bbl.
Total motor gasoline inventories increased by 4.8 million bbl to 225.6 million bbl during the profiled week, adding to the prior week's rise of 6.4 million bbl.