Oil Prices Soften as Russian Supply Risks Cap Losses


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil prices softened Wednesday morning, halting a three-day 
rally spurred on by concerns over Russian crude oil supply as Ukraine 
intensified its attacks on oil infrastructure.  

   NYMEX-traded WTI for October delivery fell $0.20 to trade near $64.32 bbl, 
and ICE Brent for November delivery softened $0.190 to $68.28 bbl.

   October RBOB gasoline futures slid $0.0030 to $2.0386 gallon, and the 
front-month ULSD contract retreated $0.0175 to $2.3760 gallon.

   The U.S. dollar index strengthened by 0.147 points to 96.395

   Ukrainian strikes on Russian refineries, fuel depots and pipelines feeding 
export terminals have dented oil supply, although the extent of the damages and 
their precise impact on production remained elusive. According to a Bloomberg 
report, Goldman Sachs estimated that Ukrainian attacks have taken offline some 
300,000 bpd of Russian refining capacity since the beginning of August. On 
Tuesday, a Ukrainian attack sparked fires at the 140,000-bpd capacity Saratov 
refinery.

   Meanwhile, the European Union looked to more closely coordinate sanctions 
with the United States and speed up the phase-out of Russian oil imports.

   The EU on Monday postponed the implementation of the 19th sanctions package 
against Russia after U.S. President Donald Trump conditioned fresh U.S. 
sanctions on NATO and EU countries ceasing all purchases of Russian oil.

   The reviewed package may include secondary sanctions on buyers of Russian 
oil, and, according to a social media statement by European Commission 
President Ursula von der Leyen, will contain a plan to more quickly phase out 
purchases of Russian energy. While Russian flows to Europe have plummeted since 
the invasion of Ukraine, two landlocked NATO and EU countries, Slovakia and 
Hungary, are currently exempt from the EU embargo on Russian oil imports, given 
their limited supply alternatives. Under their current agreement, EU countries 
have until 2028 to completely faze out Russian energy purchases.

   Markets also seemingly shrugged off an industry report showing declining 
U.S. crude oil and gasoline stockpiles. The American Petroleum Institute on 
Wednesday reported commercial crude oil inventories fell by 3.42 million bbl 
last week, with stocks at the Cushing, Oklahoma tank farm, delivery point for 
WTI futures, shrinking by 379,000 bbl. Counteracting the draws, API saw a 1.906 
million bbl build to distillate fuel oil stocks in the week ending September 
12. Official government oil inventory data from the U.S. Energy Information 
Administration is scheduled for 10:30 AM ET release today.

    




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