DTN Oil Update
Oil Dips as Iran War Enters 5th Day; EIA Data Awaited
SECAUCUS, N.J. (DTN) -- Crude futures eased on Wednesday morning for the first time since the outbreak of the Iran war at the weekend as the U.S. reinforced its pledge to provide a safe passage to oil tankers Tehran had ordered off the critically important Strait of Hormuz.
The potential for Iran-U.S. talks to end the war also weighed on oil prices amid reports that operatives from Iran's Ministry of Intelligence had signaled openness to the U.S. Central Intelligence Agency for negotiations.
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Limiting the market's downside was Iraq's move to more than halve its oil production as storage capacity runs out and tankers avoid the Hormuz waterway. OPEC's second largest producer, with 4.5 million bpd, reduced output at its top field, Rumaila, by 700,000 bpd. Other fields that saw cuts included West Qurna 2, which experienced a drop of 450,000 bpd, and Maysan, which lost approximately 350,000 bpd. Iraq has also suspended crude production from the northern Kirkuk region as a precautionary measure.
In the U.S., the Energy Information Administration will release at 10:30 EST, the first weekly inventory data since the war began. The data tracks oil stockpiles for the week through Feb. 27, just a day before the start of the conflict. EIA data could be a highwater mark for U.S. crude imports in the coming weeks due to the disruptions in the Strait of the Hormuz.
At 9:00 a.m. EST, NYMEX WTI crude futures for April delivery were down $0.69, or 1%, to $73.87 bbl, after an 11% rally over two prior sessions that took the U.S. crude benchmark to a 14-month high of $77.98 bbl.
ICE Brent crude for May delivery slid $0.33, or nearly 0.4%, to $81.07 bbl, after a 20-month high of $85.12.
Downstream, ULSD futures for April were down $0.0251 to $3.1618 gallon, after scaling $3.3692 in the previous session, their highest since December 2022.
Gasoline was the only component of the oil complex that bucked the downtrend. RBOB futures for April delivery rose by $0.0100 to $2.4674 gallon, after setting a 20-month high of $ 2.5328 this week.
The U.S. Dollar Index was little changed against a basket of currencies at 98.785 points, after a three-month high of 99.68 previously.
U.S. Treasury Secretary Scott Bessent reinforced at a news conference on Wednesday U.S. President Donald Trump's pledge from Tuesday, March 3, that the navy was prepared to escort tankers passing through the Hormuz after Iran fired at commercial ships in the strait, warning them off the waterway that provides passage to a fifth of world petroleum trade. Trump had also suggested U.S. help for vessel operators finding difficulty in insuring cargo passing through the strait.