Oil Slide Extends to Weekly Drop on Hormuz Flow Pickup


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures edged lower Friday (8/28), with crude 
benchmarks losing more than 4% on the week amid recovering tanker traffic in 
the Middle East.  Diplomatic progress in the Persian Gulf also eroded the 
market's geopolitical risk premium.

   NYMEX WTI crude for October delivery fell $0.13, or 0.16%, to settle at 
$83.40 bbl. For the week, the U.S. crude benchmark fell 4.5%.

   ICE Brent crude for November delivery retreated $0.64, or 0.72%, to close at 
$88.52 bbl. The global crude benchmark slid 4.1% on the week.

   The drop in crude futures coincided with a stronger dollar. By 2:25 p.m. ET, 
the U.S. dollar index moved up 0.553 points to 99.645 against a basket of 
currencies.

   Downstream, fuel futures diverged from crude's losses to finish higher, 
underpinned by tightening global refined product inventories following 
extensive processing outages. Ukrainian drone strikes overnight targeted 
another major Russian refinery, maintaining upward pressure on refined fuel 
supply.

   NYMEX ULSD for October delivery climbed $0.0737, or 1.77%, to close at 
$4.2490 gallon. For the week, it was higher by 2.1%.

   NYMEX RBOB for October advanced $0.0598, or 2.00%, to finish at $3.0502 
gallon. On the week, it was up 1.8%.

   Except for Thursday's session, WTI and Brent futures slid through the week 
as the White House transitioned from military action to targeted economic 
sanctions against Iran.

   Market sentiment was further weighed by a U.S. economic package on Monday 
that omitted secondary sanctions on major Asian importers of Iranian crude.

   Signs of expanding maritime traffic through the Strait of Hormuz have helped 
ease global supply fears.

   Ship tracking data confirmed a pickup in regional crude exports, with 
tankers utilizing dark voyages within an escorted coastal corridor. Industry 
estimates place current physical flows through the Strait of Hormuz between 
one-third and two-thirds of pre-war levels.

   Iran and Oman also pledged this week to make a new joint shipping lane on 
the Hormuz -- the waterway straddling their borders --operational within 30 to 
60 days. The White House has, however, opposed any proposal related to Hormuz 
outside of its ambit.




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