DTN Oil Update
WTI at $64 Ahead of Iran Talks as US Crude Stocks Swell
VIENNA (DTN) -- Oil and product futures fell Thursday morning ahead of the third round of nuclear talks between the U.S. and Iran in Geneva. An outsized build in U.S. crude inventories added to the market's downward pressure.
Crude prices have mostly fallen this week as U.S. President Donald Trump appeared to prioritize diplomacy in trying to get Iran to dismantle its nuclear program, after last week's sharp oil market rally triggered by his threats of military action.
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While supply risks in the event of a strike on OPEC's fourth largest exporter remain elevated, other Middle East producers -- led by Saudi Arabia -- were already gearing toward higher production, reports said.
As OPEC's largest producer, the Saudis could also divert more oil flows to export terminals on the Red Sea coast, bypassing the Strait of Hormuz, which could potentially close in the event of military action involving Iran.
Indications of higher supply versus demand have continuously limited the upside in crude prices since the start of the year.
Forecasting agencies like the International Energy Agency and the U.S. Energy Information Administration (EIA) have both said they expect a large surplus in 2026.
EIA data on Wednesday showed commercial crude oil inventories in the U.S. expanding by 16 million barrels (bbl) in the week ended Feb. 20. The largest weekly build in three years came as refiners cut back crude oil processing by more than 400,000 barrels per day (bpd) amid deep maintenance and as net imports increased by an equal amount.
Expectations of an inventory build moderated somewhat the bearish effect on prices a weekly stock jump of this magnitude would otherwise exert. Crude inventories in the U.S. ended last week only 1% above year-ago levels and were still trailing the five-year average by 3%.
NYMEX WTI crude futures for April delivery fell $1.29 to $64.13 bbl, while ICE Brent crude for April delivery retreated $1.14 to $69.71 bbl.
Downstream, front-month RBOB futures slid $0.0207 to $1.9707 gallon, and ULSD futures fell $0.0501 to trade near $2.6239 gallon.
The U.S. Dollar Index was little changed, down 0.05 points to 97.575 against a basket of foreign currencies.