WTI at $64 Ahead of Iran Talks as U.S. Crude Stocks Swell


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures fell Thursday (2/26) morning ahead 
of the third round of nuclear talks between the U.S. and Iran in Geneva today. 
An outsized build in U.S. crude inventories added to the market's downward 
pressure.

   Crude prices have mostly fallen this week as U.S. President Donald Trump 
appeared to prioritize diplomacy in trying to get Iran to dismantle its nuclear 
program, after last week's sharp oil market rally triggered by his threats of 
military action.

   While supply risks in the event of a strike on OPEC's fourth largest 
exporter remain elevated, other Middle East producers -- led by Saudi Arabia -- 
were already gearing towards higher production, reports said.

   As OPEC's largest producer, the Saudis could also divert more oil flows to 
export terminals on the Red Sea coast, bypassing the Strait of Hormuz, which 
could potentially close in the event of military action involving Iran.

   Indications of higher supply versus demand have continuously limited the 
upside in crude prices since the start of the year.

   Forecasting agencies like the International Energy Agency and the U.S. 
Energy Information Administration (EIA) have both said they expect a large 
surplus in 2026.

   EIA data on Wednesday (2/25) showed commercial crude oil inventories in the 
U.S. expanding by 16 million bbl in the week ending February 20. The largest 
weekly build in three years came as refiners cut back crude oil processing by 
more than 400,000 bpd amid deep maintenance, and as net imports increased by an 
equal amount.

   Expectations of an inventory build moderated somewhat the bearish effect on 
prices a weekly stock jump of this magnitude would otherwise exert. Crude 
inventories in the U.S. ended last week only 1% above year-ago levels, and were 
still trailing the five-year average by 3%.

   NYMEX WTI crude futures for April delivery fell $1.29 to $64.13 bbl, while 
ICE Brent crude for April delivery retreated $1.14 to $69.71 bbl.

   Downstream, front-month RBOB futures slid $0.0207 to $1.9707 gallon, and 
ULSD futures fell $0.0501 to trade near $2.6239 gallon.

   The U.S. dollar index was little changed, down 0.05 points to 97.575 against 
a basket of foreign currencies.




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