Oil Futures Fall Despite Multi-Year U.S. Crude Stocks Draw


   
Maria Eugenia Garcia
DTN Energy Editor

   HOUSTON, TX (DTN) -- Crude oil futures extended losses on Wednesday (7/1) 
despite the largest weekly draw in U.S. crude inventories in nearly eight 
years, as reported by the Energy Information Administration. Investors instead 
focused on expectations that indirect negotiations between the U.S. and Iran 
aimed at ending hostilities were making progress.

   White House envoys arrived in Qatar on Tuesday (6/30) to resume technical 
talks, the first step toward a potential permanent peace deal. The discussions 
were held indirectly through Qatari mediators, with no direct engagement 
between U.S. and Iranian officials. Although little information has emerged 
from the negotiations, multiple media outlets, citing an anonymous U.S. source, 
reported that technical talks were progressing.

   Meanwhile, ship tracking data revealed that traffic through the Strait of 
Hormuz rose on Tuesday for the first time since last week's Iranian attacks on 
two vessels. Inbound traffic into the Persian Gulf increased sharply, showing 
growing confidence among shippers that the chokepoint will remain open and safe 
for transit.

   Still, analysts expect it will take weeks before the flow of Persian Gulf 
supplies eases inventory pressures. Meanwhile, commercial crude oil stocks in 
the U.S. have been depleting rapidly amid record high exports.

   The Energy Information Administration reported Wednesday that U.S. 
commercial crude oil inventories declined for a 10th consecutive week, during 
the week ended June 26, along with gasoline stocks and a rise in distillate 
fuel and jet fuel in the same period. 

   Commercial crude oil inventories fell by 3.8 million bbl to 408.4 million 
bbl during the week, the lowest since the week ended September 28, 2018, when 
stocks stood at 403.9 million bbl. Year-over-year crude oil inventories dropped 
10.6 million bbl, or 2.5%.   On Tuesday (6/30), the American Petroleum 
Institute said that nationwide stockpiles shrank by 6.1 million bbl last week.

   The front-month NYMEX WTI futures contract fell $1.23 to $68.271 bbl, while 
ICE Brent futures contract for August delivery dipped $1.58 to $71.37 bbl.

   Downstream, NYMEX ULSD futures for August delivery edged down $0.0172 to 
$3.2119 gallon, in contrast, the front-month RBOB futures rose $0.0432 to 
$2.9381 gallon.

   The U.S. dollar index strengthened by 0.198 points to 101.155 against a 
basket of foreign currencies.




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