DTN Oil Update
Oil Futures Climb Over $1 on Limited Supply Expectations
HOUSTON (DTN) -- NYMEX WTI futures contract for March delivery and second month ICE Brent advanced over $1 Tuesday morning, on expectations of tight supplies due to stricter sanctions on Russian and Iranian crude and the extension of production cuts from OPEC.
The front-month NYMEX WTI futures contract rose by $1.14 to $73.46 bbl and the April ICE Brent futures contract climbed by $1.22 to $77.90 bbl. March ULSD futures contract rose by $0.0377 to $2.4886 gallon while RBOB futures contract for March delivery rose by $0.0356 to $2.1398 gallon.
The U.S. Dollar Index dropped by 0.1% to 108.120 against a basket of foreign currencies.
On Jan. 10, the U.S. Department of the Treasury imposed sanctions on a significant number of vessels, including a shadow fleet and blocked two major Russian oil producers
Last week, the United States also imposed sanctions on "an international network for facilitating the shipment of millions of barrels of Iranian crude worth hundreds of millions of dollars to the People's Republic of China," according to a statement released by the Treasury on Feb. 6.
Expectations of tight supplies driven by declining oil exports from Russia and Iran -- primarily to China -- due to the sanctions, have set a bullish tone in the market this week, despite ongoing concerns about the potential impact of a trade tariff war between the U.S. and China could have on the global economy.
The supply tightness is also anticipated due to OPEC's decision to maintain its voluntary output cuts of 2.2 million bpd until April, with the possibility of an extension due to the uncertainty generated by 10% trade tariffs on imported goods from China, and 25% on imports of aluminum and steel from Canada and Mexico.
Federal Reserve Chair Jerome Powell is scheduled to testify in Washington Tuesday and respond to questions from Republican and Democrat legislators about the U.S. economic situation. This will be his first testimony under President Trump's second term.
The Bureau of Labor Statistics will release the Consumer Price Index for January on Wednesday, Feb. 12, which is expected to be around 2.8%, compared to 2.9% recorded in December.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
