DTN Oil Update
Oil Prices Near 7-Month Highs on Elevated Iran Tensions
VIENNA (DTN) -- Oil and product futures were mostly higher Tuesday morning, hovering near July peaks, as tensions between the U.S. and Iran stayed elevated ahead of negotiations scheduled for this week.
NYMEX traded WTI futures for April delivery rose $0.42 to $66.73 bbl, and ICE Brent for April delivery advanced $0.39 to $71.88 bbl.
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Downstream, ULSD futures added $0.0552 to trade near $2.7340 gallon. RBOB futures, however, bucked the uptrend, with the front-month edging lower by $0.0118 to $1.9774 gallon.
The U.S. Dollar Index strengthened by 0.234 points to 97.8750 against a basket of foreign currencies.
Brent and WTI futures reached a seven-month high during Monday's session on reports of the State Department evacuating non-essential personnel from the U.S. embassy in Beirut, a stronghold of Iran-affiliated Hezbollah. U.S. President Donald Trump, meanwhile, on Monday reiterated on social media that not reaching a deal "will be a very bad day for that Country, and very sadly, its people." U.S. negotiators are set to meet Iran's foreign minister for a third round of nuclear talks in Geneva on Thursday, Feb. 26.
Prices were also boosted by lower-than-expected tariff rates. The U.S. on Tuesday imposed an across-the-board 10% tariff on goods imports after the Supreme Court last week struck down the president's use of emergency laws to enact high import tariffs. Following the ruling, the president said he will institute a 15% rate using other legal mechanisms.
Mideast escalation risks were also reflected in rates for chartering dirty tankers, which have soared to the highest in three years. This year alone, the Baltic Dirty Tanker Index shot up by 55%. Rates for crude tankers from the Middle East to Asia have more than doubled since the beginning of the year.
Geopolitics aside, traders were closely monitoring U.S. diesel and gasoline inventories, the latter of which began last week with a decline from a prolonged build-up that peaked at 5% above the five-year average. The American Petroleum Institute's weekly inventory report is scheduled for release after market hours today, followed by official inventory data from the U.S. Energy Information Administration on Wednesday.
The Conference Board, meanwhile, issues at 10 a.m. EST today its monthly update on U.S. Consumer Confidence. The data, which indicates views and expectations on personal finances and inflation, is expected to see a modest rebound after hitting a 12-year low last month.