Crude oil futures seesawed in the middle of the trading week as the military conflict in Eastern Europe and bearish storage report weighed on the commodities market. With a strengthening US dollar, energy investors are attempting to carve out a path for crude prices, which might be impossible to do now.
October West Texas Intermediate (WTI) crude oil futures slipped $0.17, or 0.2%, to $84.28 per barrel at 14:32 GMT on Wednesday on the New York Mercantile Exchange. US crude prices had been up as much as $86 in overnight trading before erasing their gains. Year-to-date, WTI is only up about 12%.
Brent, the international benchmark for oil prices, topped $91 midweek. November Brent crude futures added $0.038, or 0.38%, to $91.01 a barrel on London’s ICE Futures exchange. Brent has also been struggling for direction this month, with multiple stop-and-start pushes.
According to the US Energy Information Administration (EIA), domestic inventories of crude oil rose 1.142 million barrels for the week ending September 16, falling short of the market estimate of a 2.161-million build.
Supplies at the Cushing, Oklahoma storage facility increased 343,000 barrels. Gasoline stocks jumped 1.569 million barrels, while distillate inventories climbed 1.231 million barrels.
On the geopolitical front, oil prices had gains on news that Russian President Vladimir Putin announced a partial draft of citizens to expand his war in Ukraine. Putin also pledged to use all means necessary to defend annexed areas of Ukraine, adding that his was “not a bluff.
“In the best case this makes any peace deal that much more of a distant prospect, considering that Ukraine won’t give up any of these lands and Russia will certainly not cease its claim on the territory after it has been strengthened by a ‘popular vote’,” said Bas van Geffen, senior macro strategist at Rabobank, in a note to clients on Wednesday. “In the worst case, this is exactly the pretext that Putin needs for the deployment of nuclear or chemical weapons when Ukraine pushes ahead with its counteroffensive – or at the very least to further increase such threats to the West, adding another bout of uncertainty to the geopolitical mix.”
In other political news, the US administration announced that it would release an additional ten million barrels from the Strategic Petroleum Reserve (SPR) for delivery in November, which ostensibly extends the six-month plan.
Crude prices also weakened on a strengthening greenback as the US Dollar Index (DXY) surged 0.56% to 110.84, from an opening of 110.22. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.
In other energy markets, October natural gas futures were flat at $7.71 per million British thermal units (Btu). October gasoline futures were also flat at $2.4494 per gallon. October heating oil futures dropped $0.0752, or 2.28%, to $3.2288 a gallon.