Oil Hits 3-Mo High; Then Falls on Iran, U.S. Crude Build


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures hit three-month highs Wednesday (1/14) to 
settle up for a fifth straight day, before tumbling on developments related to 
Iran. The U.S. Energy Information Administration's report of large weekly 
builds in U.S. crude and gasoline also limited the market's upside.

   Energy prices reversed course after U.S. President Trump told media that he 
had been informed that the "killing in Iran is stopping" and there were "no 
plan for executions" reported by the Islamic region. The five-day rally in oil 
had been underpinned by geopolitical risks triggered by more than two weeks of 
civil unrest and deaths of thousands of protestors in Iran reported by human 
rights groups. Oil traders had been concerned over how all that would impact 
oil supplies from OPEC's fourth-largest producer.

   NYMEX WTI for February delivery settled Wednesday's regular trading session 
up $0.87, or 1.4%, at $62.90 bbl after a three-month high at $ 62.20. In 
post-settlement trade, it tumbled 1.8%.

   The March ICE Brent futures contract closed up by $1.05, or 1.6%, at $66.52 
after rallying to $66.67 earlier. It fell 1.9% in post-settlement.

   Among refined products, the front-month ULSD futures fell by $0.0171 to 
$2.2213 gallon in after-hours trade. Front-month RBOB retreated by $0.0347 to 
$1.8211 gallon.

   Until the late about-turn on Wednesday, crude futures had been on a tear, 
rallying some 9% over just five sessions, after last year's 20% drop.

   The price surge came despite a mixed supply demand outlook with OPEC and its 
allies kept demand growth forecast for 2026 unchanged at 1.38 million bpd in a 
monthly oil report published Wednesday -- even as the International Energy 
Agency forecast that supply will exceed demand by around 3.8 million bpd this 
year.

   If the EIA reports more inventory builds, that could further weight on the 
market, said analysts.

   U.S. commercial crude inventories rose by 3.3 million bbl to 422.4 million 
bbl last week, snapping two consecutive weeks of declines, the EIA said in its 
Weekly Petroleum Status Report. The inventories were also higher by 9.8 million 
bbl, or 2.4%, on the year.

   Gasoline stockpiles increased by 9 million bbl to 251 million, adding to the 
prior week's surplus of 7.7 million. Distillate balances registered a drop, 
though the slide was just 100,000 bbl to 129.2 million, after the previous 
week's outsized gain of 5.6 million bbl.

   "Gasoline builds are typical for the current winter season, but their pace 
has been unusually high," noted senior DTN analyst Karim Bastati.

   Gasoline production remained elevated as refiners maximized output to profit 
from relatively high margins for middle distillates, Bastati said.

   At the same time, higher penetration by electric vehicles into the 
automobile market, along with engine efficiency gains, were offsetting the 
demand uptick in gasoline fueled by lower retail pump prices, he added.

    




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