Crude Oil Futures Fall Over 4% on Rising Hormuz Traffic


   
Maria Eugenia Garcia
DTN Energy Editor

   HOUSTON, TX (DTN) -- Oil futures slid more than 4% on Wednesday (6/24) as 
growing vessel traffic through the Strait of Hormuz eased  concerns of supply 
tightness, overshadowing federal data showing weekly U.S. crude inventories 
falling to a 17-month low last week.  

   The August NYMEX WTI crude futures contract dipped by $3.17 to $70.04 bbl, 
after hitting an intraday low at $69.33. It was the lowest level since March 4 
when the contract settled at $70.41 bbl.  The ICE Brent crude futures contract 
for August delivery was down by $3.79, or 4.92%, to $73.29 bbl.

   The front-month RBOB futures dropped by $0.0845 to $2.8745 gallon. In 
contrast, the NYMEX ULSD futures contract for July delivery fell $0.0285 to 
$3.1261 gallon.

   The U.S. dollar index strengthened by 0.212 points to 101.385 against a 
basket of foreign currencies, the highest in more than a year.

   Traffic through the Strait of Hormuz picked up further on Tuesday, including 
three very large crude carriers (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.

   The sharp decline in the geopolitical risk premium suggest market 
participants remain optimistic about the current truce which gives the U.S. and 
Iran another seven weeks to negotiate a permanent peace deal.

   However, the bearish sentiment in the oil futures market was not offset by 
continued draws in  crude oil inventories. The Energy Information 
Administration, reported on Wednesday  that U.S. commercial crude oil stocks 
declined by 6.1 million bbl to 412.1 million during the week ended June 19. 
This was the lowest commercial crude oil inventory level since the week ended 
January 17, 2025, when stocks stood at 411.7 bbl million bbl.

   Meanwhile, distillate fuel inventories rose by 3 million bbl to 106.1 
million bbl during the reference week and 800,000 bbl above year-ago levels. On 
the gasoline front, weekly inventories rose by 2.1 million bbl to 216.3 million 
bbl, while remaining 11.6 million above year-ago levels.

   Jet fuel inventories also climbed by 1.3 million bbl to 46.3 million bbl 
last week and were up 2.1 million bbl from year-ago levels. Refinery 
utilization slid to 96.1% last week from 96.7% in the prior week. Crude oil 
inputs into refineries averaged 17.111 million bpd, down by 81,000 bpd from the 
previous week's 17.192 million bpd.




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