Brent Slides to Pre-War Levels on Middle East Supply Surge


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures slid for the third consecutive trading day 
Thursday (7/2) as Middle Eastern producers rushed to send barrels through the 
now reopened Strait of Hormuz.

   By 08:00am ET, ICE Brent for August delivery was down $1.27 to trade near 
$70.30 bbl, the lowest since the week before the start of the U.S.-Israeli war 
on Iran. NYMEX WTI for August delivery fell $1.41 to $67.17 bbl.

   Downstream, NYMEX ULSD futures for August delivery retreated $0.0342 to 
$3.1837 gallon, and front-month RBOB futures slumped $0.0585 to $2.8867 gallon.

   The US dollar index softened by 0.276 points to 100.88 against a basket of 
foreign currencies.

   The abrupt surge in oil supply has led to a glut in some markets, given that 
refiner demand is still reeling from the nearly four-month long disruption and 
emergency stockpiles continue to be released. This imbalance is likely 
temporary in nature, given that demand is set to recover and inventories will 
need to be restocked, all while oil flows from the region are still trailing 
pre-war levels by some 4-5 million bpd.

   Progress in the ongoing U.S.-Iranian peace process also weighed on prices. 
Qatari officials spoke of "positive progress" in the technical talks between 
mediators and U.S. diplomats, and announced that the next round of direct 
negotiations between Washington and Tehran may take place as early as next 
Friday (7/10).

   In the U.S., meanwhile, crude oil stockpiles continued to decline at a rapid 
pace. The U.S. Energy Information Administration on Wednesday reported that 
commercial inventories have now fallen to an eight-year low 408.4 million bbl. 
Total crude oil stocks including those in the Strategic Petroleum Reserve are 
the most depleted since 1984, and combined oil, LPG and refined product 
inventories at their lowest since 2003.




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