DTN Oil Update
WTI at $66 on Iran Tensions; Gasoline, ULSD at 2-Month High
SECAUCUS, N.J. (DTN) -- Crude futures jumped more than 3% Thursday, Jan. 29, hitting five-month highs, as Iran announced military exercises in the Persian Gulf that added to tensions already running high from threats of U.S. military strikes against the Islamic republic.
Gasoline and ULSD futures reached their highest levels in two months as the U.S. Dollar Index remained in negative territory against a basket of currencies though off from Wednesday's four-year lows. A weaker dollar enhances the global competitiveness of U.S. fuel exports, while record net volumes and lower shipping costs further support domestic refining margins.
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Oil prices rallied for a third straight day after U.S. President Donald Trump warned Iran to enter into nuclear disarmament talks with Washington immediately or face military strikes. Trump wrote on his Truth Social media site that U.S. warships positioned in the Persian Gulf were ready to fulfill their mission "with speed and violence, if necessary."
The Associated Press, meanwhile, reported that Iran had issued a warning to ships at sea that it planned to run a drill next week that would include live firing in the Strait of Hormuz.
The strait, straddling Iran and the Arabian Peninsula, is a chokepoint through which more than a fifth of global oil supply flows daily. Oil markets have been on tenterhooks over the security of Middle East oil supplies since mass civilian protests broke out a few weeks ago, killing thousands of people in Iran, which produces about 3.2 million bpd, according to OPEC.
Adding to the bullish fervor in oil was the U.S. Energy Information Administration's weekly inventory showing a 2.3 million bbl decline in crude stockpiles last week, and a smaller-than-expected rise in distillate fuel oil balances.
Data on Thursday showing a near 95% jump in the U.S. trade deficit for November and lower-than-expected weekly U.S. unemployment claims did not impact energy market sentiment.
NYMEX WTI futures crude for March delivery settled up $2.21, or 3.5%, at $65.42 bbl after peaking at $66.48 -- its highest since August.
ICE Brent crude for March delivery closed up $2.31, or 3.4%, at $70.49 bbl, after a five-month high at $71.89.
Downstream, NYMEX RBOB futures for March delivery advanced by $1.9336 to $1.9336 gallon, while ULSD futures for March rose $0.0403 to $2.4872 gallon.
The U.S. Dollar Index slid by 0.144 points to 96.13 against a basket of currencies.