Oil futures prices dropped Wednesday, continuing the choppy trading that has marked recent sessions as risk-on markets, including stocks, took a fresh hit.
The downside was tempered somewhat as persistent tension in the Middle East — with the Trump administration’s John Bolton making fresh comments toward Iran early Wednesday — raises supply concerns that are generally supportive to prices.
West Texas Intermediate crude for July delivery CLN19, -3.18% on the New York Mercantile Exchange fell $1.31, or 2.2%, at $57.83 a barrel, after gaining in Tuesday’s session. Front-month contract prices lost 6.8% last week as the contract hit its lowest level in more than two months. Front-month WTI is down roughly 8% for May so far.
Global benchmark July Brent BRNN19, -2.52% fell $1.77, or 2.5%, at $68.34 a barrel. It shed 4.9% last week, also the weakest weekly performance for a front-month contract this year. The contract is down some 5% for the month to date.
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Stock-index futures pointed to a lower start for Wall Street on Wednesday as worries about trade tensions and the outlook for global growth weighed on equity markets and kept front and center a question of continued strong demand for the world’s oil.
Still, Middle East uncertainty hangs over trading, supporting prices on concerns that escalating tensions could lead to shipping disruptions.
Donald Trump’s national security adviser said Wednesday there was “no reason” for Iran to back out of its nuclear deal with world powers other than to seek atomic weapons, a year after the U.S. president unilaterally withdrew America from the accord.
Bolton also claimed — without offering evidence — that the alleged sabotage of four oil tankers off the coast of the United Arab Emirates came from naval mines placed “almost certainly by Iran,” the Associated Press reported, citing comments Bolton made to journalists in Abu Dhabi.
As for the bigger supply picture, the market is looking ahead to the meeting of members and some nonmembers of the Organization of the Petroleum Exporting Countries. Analysts have pointed out that although the Saudis have said they wouldn’t increase production, reports coming out ahead of that meeting leave some open questions. Recently, there has been speculation, though no confirmation, that OPEC will decide to change the date of the next meeting to the first week of July from June 25-26. The output-cut agreement expires at the end of June.
Weekly data on U.S. petroleum supplies are delayed this week due to Monday’s holiday. The American Petroleum Institute will release its figures late Wednesday, while the Energy Information Administration’s report is due Thursday morning.
“Flooding in the Midwest is apparently hampering the transport of crude oil from the Cushing storage hub in Oklahoma. This suggests that stocks will be further increased, and could therefore weigh on WTI,” said commodities analysts at Commerzbank, in a note. “Consequently, the price discount as compared with Brent could also rise further. Currently it already amounts to $11 per barrel. The last time it was this high was nearly a year ago.”
Back on Nymex, June natural gas NGM19, +1.59% gained 1.5%, to $2.62 per million British thermal units. June gasoline RBM19, -2.56% fell 2.4% at $1.9089 a gallon and June heating oil HOM19, -2.15% fell 2% to $1.9511 a gallon.
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