Market Report & Analysis for 7/18/2019 Morning Edition

Morning Market Overview

Oil Futures Higher Early, Shrugging Off Bearish API Data Washington, D.C. (DTN)

New York Mercantile Exchange oil futures nearest to delivery and Intercontinental Exchange Brent futures reversed higher in overnight trade following Tuesday’s slump, shrugging off smaller-than- expected draws in U.S. crude and gasoline inventories reported by the American Petroleum Institute.

Just near 9:00 AM ET, August West Texas Intermediate crude oil futures traded 59cts higher at $58.21 bbl while September ICE Brent crude rose 78cts to $65.13 bbl. August RBOB futures traded 2.23cts to $1.9141 gallon and the August ULSD contract rose 2.05cts to $1.9255 gallon. API reported domestic crude stockpiles fell 1.410 million bbl in the week ended July 12, well below the calls for a 4.2 million bbl draw, while also detailing a much-smaller-than expected drop in gasoline inventories.

Data showed gasoline supply in the United States dipped 476,000 bbl versus the expected 1.5 million draw and distillate stocks rose by 6.226 million bbl, far surpassing an estimated 300,000 bbl gain. Market participants expected large draws in U.S. crude and petroleum stockpiles last week after Barry shattered over 70% of Gulf of Mexico crude oil production.

More than half of the regional output remained offline on Tuesday, according to the Bureau of Safety and Environmental Enforcement. API data suggested Barry’s effect on domestic supplies might not have been as large as markets expected. Wednesday morning, traders await official figures from Energy Information Administration set to be published 10:30 AM EST.

Oil futures slumped Tuesday afternoon after the White House signaled de- escalation in US-Iran tensions and a potential removal of sanctions on Iran’s crude exports. Iran’s Foreign Minister Mohammed Zarif told NBC News this week that “room for negotiation is wide open” once the U.S. removed its punishing sanctions. U.S. Secretary of State Mike Pompeo said Tuesday Iran is ready to negotiate its nuclear program after months of escalating tensions in the Gulf region. The Trump administration sent warships to the Gulf following attacks on six oil tankers passing through the area in May and June. The latest policy shift has a potential to remove risk factor in the Middle East that has so far supported oil prices.