Oil Rally Snaps as U.S. Crude Stocks Exceed 3-Year Highs


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The rally in oil stalled Wednesday (8/12) after a 
four-day as weekly U.S. crude stockpiles at above three-year highs offset some 
of the concerns over stranded global energy shipments on the Strait of Hormuz.

   NYMEX WTI crude for September delivery rose $0.07, or 0.1%, to settle at 
$83.27 bbl. ICE Brent crude for October settled up $0.07 at $88.98 bbl. 

   Futures of refined products rose. NYMEX ULSD for September delivery advanced 
by $0.0515, or 1.2%, to close at $4.3040 gallon. NYMEX RBOB for September 
gained $0.0171, or 0.5%, to finish at $3.1537 gallon.

   The U.S. dollar index climbed 0.145 points to 99.860 against a basket of 
currencies.

   The rally in WTI and Brent snapped after data from the U.S. Energy 
Information Administration (showed crude inventories, excluding those on the 
Strategic Petroleum Reserve (SPR), surging by 17.4 million bbl to 424.4 million 
during the week ended August 7 to reach their highest since January 2023.

   SPR stocks, meanwhile, hit a 23-year low, falling 6.1 million bbl, or 2%, to 
298.7 million bbl.  

   Continuous government drawdowns of the SPR aimed at mitigating supply 
disruptions from the Middle East conflict have pulled the emergency reserve 
down nearly 26% year-over-year to its lowest level since January 1983.

   On the geopolitical front, Tehran and Washington remained at an impasse over 
reopening the Hormuz, with Iranian officials telling media they had no intent 
to conclude any deal over the waterway unless Washington acceded to their 
demands.

   Tanker traffic through the Strait remains constrained, with cargo tracking 
data showing vessel counts dropping to a one-week low of eight on Tuesday. 
Tehran's terms for reopening the Hormuz include the U.S. paying war reparations 
and U.S. war ships leaving the Persian Gulf altogether -- conditions that U.S. 
President Donald Trump has flatly rejected.

   The global supply squeeze has prompted the Organization of Petroleum 
Exporting Countries (OPEC) to cut its crude demand outlook for a fourth 
straight month. In its July supply-demand report issued Wednesday, OPEC 
anticipated that world oil demand will reach 580,000 bpd in 2026, down from its 
previous forecast of 780,000 bpd.




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