DTN Oil

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved higher Thursday, with gains by the ULSD and RBOB contracts outpacing the crude grades despite an oil tanker seizure in the Gulf of Oman, as a "very cold pattern is setting in[to]" a large swath of the United States according to DTN's Frontier Weather.

Iran-state media, Islamic Republic News Agency, said the Iranian Navy seized a U.S. oil tanker in the Sea of Oman.

"The Public Relations Department of the Iranian Navy announced on Thursday that the seizure has taken place on court order as it said that the Suez Rajan tanker had earlier stolen an Iranian oil cargo and handed it over to the US," said IRNA.

The oil tanker, renamed St. Nikolas, was boarded by four or five armed men near Sohar, Oman, Thursday, and changed course to Iran. IRNA said it was headed to "Iranian southern ports."

The oil tanker was sailing to western Turkey on course to travel through the Suez Canal, carrying 1.04 million bbl of oil that was loaded at the Basra port in Iraq. The oil tanker was seized by the United States in 2023 for allegedly trying to sell more than 980,000 bbl of Iranian oil to China in violation of U.S. sanctions.

John Kirby, White House National Security Council strategic communications coordinator, said the United States condemned the action, and that Tehran had no justification for seizing the tanker and must release the ship and "stop these provocations." Kirby said the U.S. would continue to work with its allies and maintain sanctions against Iran.

Following more than two dozen attacks on commercial shipping in the Red Sea and the Gulf of Aden since October by Iranian-funded Houthi militia, and scores of attacks by additional Iranian-backed militias on U.S. bases in Iraq and Syria, Brent and West Texas Intermediate futures pared an early advance, as traders speculated the incident would not trigger an escalation by the White House.

ICE March Brent futures settled up $0.61 at $77.41 bbl, trimming an advance to a $79.10 bbl six-day high. NYMEX February WTI futures gained $0.65 with a $72.02 bbl settlement, pulling back from a $73.81 four-day high.

In contrast, NYMEX ULSD and RBOB futures settled near their session highs amid harsh weather conditions in the Pacific Northwest and central U.S., which will push east to the East Coast in the next six to ten days.

"New systems will bring snow to the NW today and Fri, spreading across the Cent Rockies and Four Corners to the Cent S US by Sunday night, with chances of snow as far south as the I-40, and a threat of freezing rain in the Arklatex region, including Dallas," said Frontier Weather. "Increasingly frigid Arctic air will spread from the NW across the Central US, forced across by strong ridging near AK and Greenland, with temperatures 30-50 degrees below normal at the coldest across the N Rockies and N Plains in days 2-5."

Traders remember Winter Storm Uri in February 2021 and crippling winter weather across most of the U.S. and parts of Canada from Dec. 21-26, 2022, that lead to extended operational issues at refineries and distribution logistic channels and bid up products futures.

This week, Iowa Governor Kim Reynolds eased restrictions for transportation of and access to fuel used for heat through Feb. 9, pointing to high demand for petroleum products and "extensive challenges to timely access to supplies," with drivers transporting motor and heating fuels experiencing long wait times at terminals and challenging driving conditions.

Yet, with nationwide inventories of distillate fuels last measured by the Energy Information Administration at a 132.4 million bbl 16-month high and gasoline at a 244.982 million bbl 22-month high, the upside for product futures was contained.

NYMEX February ULSD futures rallied $0.0732 to $2.6738 gallon settlement amid an inside trade session, holding below Wednesday's $2.7021 two-week high on the spot continuous chart. NYMEX February RBOB futures gained $0.0470 with a $2.1143 gallon settlement, ending trade near a $2.1393 gallon six-day high.

Brian L. Milne can be reached at brian.milne@dtn.com