DTN Oil Update
Oil Sees Biggest Weekly Loss Since April on Iran Deal Talk
SECAUCUS, N.J. (DTN) -- Oil futures plunged Friday, closing out their steepest weekly losses since mid-April as the U.S. and Iran appeared closer to ending their three-month long war and reopening the blockaded Strait of Hormuz to energy shipments.
Negotiators on both cited a tentative 60-day memorandum of understanding that would further halt hostilities in the Persian Gulf, allowing peace to return to the region and stranded vessels through the Hormuz. The U.S. also planned to lift its blockade on Iranian ports and hold separate discussions on Iran's nuclear agenda, officials said.
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While Iranian Supreme Leader Mojtaba Khamenei had yet to endorse the deal, U.S. President Donald Trump said he was studying the matter.
NYMEX WTI crude for July delivery settled down $1.54, or 1.7%, at $87.36 bbl, while ICE July Brent crude fell $1.66, or 1.8%, to close at $92.05.
For the week, both global benchmarks fell about 9%, their most for a week since the week ended April 17.
Refined products shadowed the crude selloff, falling 2% for the session and between 7% and 9% on the week, as traders weighed a potential normalization of global energy flows against depleted domestic product inventories. NYMEX June ULSD futures closed down $0.0814 at $ t $3.5373 gallon, while June RBOB slipped $0.0585 to $3.1267 gallon.
The U.S. Dollar Index holding flat near 99.010 against a basket of major currencies.
The late-week market collapse completely decoupled from a bullish weekly supply report issued Thursday by the Energy Information Administration. U.S. commercial crude inventories notched their fifth consecutive weekly draw, falling 3.3 million bbl to 441.7 million bbl for the week ended May 22.
The domestic refined product crunch appeared even more acute in the federal data, which showed gasoline stocks sinking 2.6 million bbl to a fresh six-month low. Simultaneously, national distillate stockpiles shed 2.1 million bbl, plunging to their lowest operating levels observed since 2003.
ExxonMobil added to the structural supply warnings Thursday, cautioning that global petroleum inventories could hit record lows within weeks if current depletion rates hold. The oil major warned that such systemic deficits would ultimately force a dramatic price spike capable of crushing consumer demand.