DTN Oil Update
Oil Up as Iran Tensions at Fore, OPEC Pauses Hikes
SECAUCUS, NJ (DTN) -- Oil futures rallied for a second consecutive trade session Wednesday, driven by increasing tensions over U.S.-Iran nuclear talks and bullish sentiment created by weekly declines in crude and distillates stocks.
U.S. President Donald Trump warned Iran's Supreme Leader Ali Hosseini Khamenei to beware as the OPEC member shifted positions on talks aimed at disarming the Islamic republic.
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Market attention has been riveted on Iran, which produces 3.2 million bpd, after Trump warned of possible military strikes if Tehran resists efforts to dismantle its nuclear program in talks scheduled to begin Friday in Oman.
The U.S. shooting down of an Iranian drone and the interception of a U.S.-flagged tanker by Iranian gunboats in recent days have added to concerns over the security of oil shipments in a region that oversees 20% or more of the world's crude cargoes.
Separately, commercial crude stocks dropped by 3.5 million bbl to 420.3 million during the week ended January 30, for the second consecutive week, the EIA said in its Weekly Petroleum Status Report on Wednesday.
The drop came in the aftermath of Winter Storm Fern, which led to production outages of approximately 2 million bpd in the Permian Basin in Texas and New Mexico, according to analysts.
Distillate fuel oil inventories tumbled by 5.5 million bbl to 127.4 million week-over-week, after a 300,000 bbl increase the prior week. Total motor gasoline stockpiles increased by 700,000 bbl to 257.9 million on week, compared to a 200,000 bbl rise the previous week.
NYMEX WTI crude futures for March delivery settled up $1.93, or 3%, at $65.14 bbl, adding to the prior session's advance of 1.7%. ICE Brent crude for April delivery rose by $2.13, or 3.2%, to $69.46 bbl.
ULSD futures for March increased by $0.0607 to $2.4700 gallon, and RBOB for March delivery finished higher by $0.0673 at $1.9652 gallon.
The U.S. Dollar Index strengthened by 0.249 points to 97.55 against a basket of foreign currencies.