DTN Oil Update

Maria Eugenia Garcia
DTN Energy Editor

HOUSTON (DTN) -- Oil futures fell Friday morning amid by ample supplies and global weak demand, despite the United States imposing a fourth round of sanctions on Iranian oil trade and a Chinese teapot refinery, which is expected to limit crude availability.

The April NYMEX WTI futures contract fell by $0.35 to $67.72 bbl while the front-month ICE Brent futures contract dropped by $0.43 $71.57 bbl. April RBOB futures contract fell $0.0155 to $2.1756 gallon and April ULSD futures decreased by $0.0136 to $2.2407 gallon.

The U.S. Dollar Index rose by 0.12% to 103.62 against a basket of foreign currencies.

On Thursday, March 20, the U.S Department of State imposed sanctions on China-based Shandong Shouguang Luqing Petrochemical Co., Ltd., a teapot oil refinery, "for purchasing and refining hundreds of millions of dollars' worth of Iranian crude oil."

The sanctions also include 12 entities and one individual, as well as eight vessels shipping millions of barrels of Iranian oil to China. "These vessels--are part of Iran's "shadow fleet" of tankers that supply teapot refineries, including Luqing Petrochemical," the DOS stated.

Meanwhile, Iran is expected to respond in the coming days to a letter from U.S. President Donald Trump seeking talks on Tehran's nuclear program, Foreign Minister Seyed Abbas Araghchi said on Thursday, while ruling out direct negotiations under sanctions, China's Xinhua news agency reported.

Stricter sanctions on Iranian, Russian and Venezuelan oil trade have been expected to limit supplies and put upward pressure on global oil futures. However, a combination of global weak demand, led by China, uncertainty on the trade tariffs and geopolitical events in the Middle East have maintained oil prices bearish.

Abundant supplies of commercial crude oil reported by the Energy Information Administration and American Petroleum Institute this week also have offset gains seen in the oil futures market the prior trading day.