Oil Prices Record 3-Day Straight Loss On Supply Woes

SECAUCUS, NJ (DTN) – Oil prices fell for a third consecutive day Friday (9/19) driven by concerns of a supply glut despite threats of reinforced sanctions against Russia.

In crude, NYMEX-traded WTI for October delivery dropped $0.84 to settle the session at $62.73 bbl, while ICE Brent for November delivery closed down $0.75 at $66.69 bbl.

Among oil products, October RBOB gasoline futures slid $0.0407 to $1.9707 gallon, and the front-month ULSD contract retreated $0.0388 to $2.3012 gallon.

The U.S. dollar index strengthened by 0.27 points to 97.63, rising a third straight session, inverse to the oil markets in a trend visible since the Federal Reserve’s 25-basis point rate cut on Wednesday (9/17).  Some market participants had expected a 50-basis point cut.

This week’s macroeconomic data releases added to the lackluster sentiment, as did a mixed U.S. oil inventory report.

The U.S. Energy Information Administration, said nationwide distillate fuel oil inventories jumped 4.7 million bbl, or 4%, in a single week to 120.6 million bbl — showing rapidly expanding middle distillate stock.

On the sanctions front, the European Commission proposed to its member states the revised 19th package of sanctions to punish Russia over the Ukraine war.

The repackaged sanctions aim to phase out Western purchases of Russian oil more quickly amid pressure from the Trump administration.

But there are other issues challenging the EU’s goals.  While Russian flows to Europe have plummeted since the invasion of Ukraine, two landlocked NATO and EU countries, Slovakia and Hungary, are currently exempt from the EU embargo on Russian oil imports, given their limited supply alternatives.

Oversupply worries have also created headwinds for the market as the likelihood of OPEC+ further unwinding production curtailments in the months ahead adds to the specter of more output from countries outside the group.