Oil Prices Slide for Third Day on Easing Supply Disruption


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures dropped to the lowest in nearly four months 
Wednesday (6/24) morning after more tankers left the Persian Gulf with turned 
on transponders as traffic through the Strait of Hormuz continued to show signs 
of normalizing.

   By 08:13am ET, ICE Brent for August delivery was down $2.31 to trade near 
$74.77 bbl, and NYMEX WTI for August delivery fell $2.10 to $71.11 bbl.

   Downstream, NYMEX ULSD futures for July delivery retreated $0.0285 to 
$3.1261 gallon, and front-month RBOB futures softened by $0.0538 to $2.9052 
gallon.

   The US dollar index strengthened by 0.232 points to 101.405 against a basket 
of foreign currencies, the highest in more than a year.

   Transits continued to pick up Tuesday, including three VLCCs carrying a 
combined 6 million bbl of crude oil. Ship tracking data showed hundreds of 
laden tankers idling in the Persian Gulf which could start moving soon as 
confidence the strait will stay open continued to grow.

   After this initial wave of oil, however, the willingness of shippers to send 
empty tankers back into the Persian Gulf will be a crucial factor determining 
how quickly oil supply returns. A plummeting risk premium indicated that market 
participants are so far optimistic about the current truce which gives the U.S. 
and Iran another seven weeks to negotiate a permanent peace deal. The U.S. 
waiving sanctions on Iranian oil exports during this period additionally 
weighed on prices, as did reports suggesting Oman will not pursue a tolling 
system together with Iran.

   Oil inventories outside the Middle East, meanwhile, continued to shrink amid 
the sizable global supply deficit. The American Petroleum Institute on Tuesday 
reported the ninth consecutive draw to commercial crude oil inventories in the 
week ending June 19. The estimated 982,000 bbl decline at the Cushing, Oklahoma 
storage hub would leave stockpiles at the WTI delivery point below the 20 
million bbl mark, considered to be the operational minimum storage level. 
Official government inventory data is scheduled for release by the U.S. Energy 
Information Administration at 10:30am ET today.




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