Oil Ends Off Highs as Mideast Relief Blunts U.S. Draws


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures rebounded Wednesday (6/17) from 
three-month lows, spurred partly by another large drawdown in U.S. crude 
inventories, although signs of global supply returning from de-escalation in 
the Middle East conflict saw the market settling off its highs.

   NYMEX WTI for July delivery settled up $0.74, or 1%, at $76.79 bbl after 
rallying to $80.03.

   ICE Brent for August delivery rose $0.59, or 0.8%, at $79.55 bbl, after a 
peak at $82.97. Downstream, NYMEX ULSD futures for July climbed $0.0244 to 
$3.1946 gallon, while NYMEX RBOB for July advanced $0.0291 to $2.9096 gallon.

   The US dollar index rose 0.516 points to 99.795 against a basket of foreign 
currencies.

   WTI and Brent futures rose as the U.S. Energy Information Administration 
reported that commercial crude inventories fell for an eight straight week, 
hitting 8-month lows.

   The 8.3 million bbl drop during the week ended June 12 matched the figure 
cited by the American Petroleum Institute for the same period and exceeded 
market expectations for a 3.6-4.6 million bbl drop. The drop was even larger if 
the 9 million bbl deficit in the Strategic Petroleum Reserve was added to the 
mix, bringing total crude inventories to their lowest levels since March 1985.

   Crude storage at the Cushing, Oklahoma delivery hub also fell, by 1.6 
million bbl, intensifying fears that prompt supplies were hitting critical 
operational minimum floors ahead of contract expiry. On the crude processing 
side, refinery crude runs jumped by 230,000 bpd, pushing national utilization 
up 1.4 percentage points to 96.7% as refiners ran through more barrels to feed 
summer demand.

   Among refined products, gasoline stocks fell by 906,000 bbl on a massive 
481,000 bpd surge in motor fuel consumption, while distillates rose by a minor 
1 million bbl. Offsetting the EIA data were media reports that three Iranian 
supertankers had exited the U.S. naval blockade, carrying nearly 5 million bbl 
of crude.

   That reinforced some trade assessments that the backlog of floating storage 
in the Persian Gulf since early March could eclipse U.S. inventory draws. It 
also caused long-term trade algorithms and macroeconomic desks to focus on the 
projected 8 million bpd surge in global supply capacity and 2 million bpd in 
annualized 2027 demand growth.

   As such, selling the back-end of the crude price dampened enthusiasm in 
prompt month trading of WTI and Brent. The Federal Reserve's decision to hold 
U.S. interest rates unchanged for a fourth straight month, citing continued 
inflationary pressures from the outcome of the Middle East, was another factor 
keeping a check on Wednesday's rise in energy futures.

    




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