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James Hyerczyk
Crude Oil
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Wednesday with the internationally-favored futures contract feeling the brunt of the selling. The catalyst behind the selling pressure is the news that the United States said it would consider requests for waivers from looming sanctions on Iranian crude exports.

At 0736 GMT, September WTI Crude Oil is trading $72.02, down $0.54 or -0.75% and September Brent Crude Oil is at $77.88, down $1.00 or -1.27%.

Earlier in the session, both futures contracts traded higher in reaction to the American Petroleum Institute’s weekly storage report.

The API reported another major draw of 6.796 million barrels of U.S. crude oil inventories for the week-ending July 7. Analysts were looking for a draw of about 4.489 million barrels.

The API also reported a draw in gasoline inventories for the week-ending July 7 in the amount of 1.59 million barrels. The estimate called for a smaller draw of 750,000 barrels.

Distillate inventories saw a build this week of 1.952 million barrels, compared to an expected build of 1.2 million barrels. In other news, inventories at the Cushing, Oklahoma site fell by 1.925 million barrels.

On Tuesday, WTI and Brent crude oil futures settled higher on multiple supply disruptions in Libya, Venezuela and Canada as well as the looming sanctions on Iran. Brent futures soared in response to a strike by two Norwegian oil workers’ trade unions that was announced on Tuesday that disrupted production at Shell’s Knarr field that may disrupt more oil production in the days to come. Bullish traders felt that these supply disruptions would likely be greater than OPEC’s ability to ramp up production.


The news that the U.S. softened its stance on Iranian sanction waivers came as a surprise and traders acted accordingly by selling their long positions in response to the possibility of additional supply.

“There will be a handful of countries that come to the United States and ask for relief from that. We’ll consider it,” Pompeo said, according to the text of an interview in Abu Dhabi with Sky News Arabia released by the U.S. State Department. He did not identify any countries.

The news shocked the market because Washington had earlier told countries they must halt all imports of Iranian oil from November 4 or face U.S. financial measures, with no exemptions.

Later today at 1430 GMT, the U.S. Energy Information Administration is expected to report a draw of about 4.1 million barrels. This report is not expected to have that much of an impact on prices because of the news about Iranian sanction exemptions.

The tone of the market is expected to be bearish as traders wait for more details about the key event.

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