Oil Prices Slip as Crude Inventories Fall, Bakken Differential Widens

Front-month WTI crude oil settled at $70.05 per barrel on Tuesday, down 0.99% for the day, according to live price data. Brent crude fell 0.66% to $73.42. The price for Bakken crude at the wellhead, reflecting a key discount to the US benchmark, widened to -$3.42 versus WTI.

The day's losses come amid mixed signals from fundamental data. According to an American Petroleum Institute (API) estimate reported by OilPrice.com, U.S. commercial crude oil inventories fell by 6.072 million barrels in the week ending June 26. This continues a trend of significant draws, with stocks shedding 59.4 million barrels over the prior eleven weeks. The Strategic Petroleum Reserve (SPR) also declined by 5.5 million barrels last week to 325.7 million barrels—the lowest level in over four decades, according to the same source.

Despite the inventory draws, prices faced downward pressure. OilPrice.com reported that flows from the Strait of Hormuz have partially resumed following the U.S.-Iran ceasefire, though tanker traffic remains well below pre-war levels. This has eased some of the extreme physical market premiums seen for alternative crudes like North Sea Forties, which became highly sought-after during the crisis.

An analysis published by OilPrice.com presented a counterintuitive outlook, suggesting that supply shortages stemming from the Iran conflict could ultimately lead to lower oil prices, potentially below $40 per barrel, alongside a deepening recession. The article argued that a "self-organizing economy" could respond to shortages not with high prices, but with reduced economic activity and government restrictions, mirroring the 2020 COVID-19 crash. The same source noted concerns over critically low levels of already-pumped oil in storage buffers.

For Bakken operators, the widening local differential to -$3.42 indicates a slight increase in regional pricing pressure relative to the US benchmark. The continued drawdown of national inventories, if sustained, could provide underlying support for WTI prices. However, the potential for renewed recessionary fears and the complex dynamics of global supply, as outlined in the analyses, injects significant uncertainty into forward price expectations. North Dakota producers will be closely monitoring both the physical flow of Gulf Coast crude and the evolving geopolitical risks affecting global benchmarks.