DTN Oil Update
Brent Below $100 on Oil, Fuel Swing; US Cites Iran Talks
SECAUCUS, N.J. (DTN) -- Crude oil and product futures tumbled in volatile trade Monday, with Brent settling below $100 bbl, after an Iranian official disputed U.S. President Donald Trump's announcement that White House representatives were in talks with Tehran to find a solution to the three-week long Middle East conflict.
WTI for May delivery settled down $10.10, or 10%, at $88.13 bbl. It tumbled 17% earlier to session low of $84.37, after an intraday high at $101.67.
The ICE Brent contract for May ended with a decline of $12.25, or 11%, at $99.94 bbl. It fell 14% earlier to $96 after peaking at $114.43.
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The Brent-WTI differential, which hit six-year highs above $16 bbl Friday, March 20, as Brent neared $120 bbl, dipped beneath $12 in the latest session.
Downstream, NYMEX ULSD futures for April delivery finished down Monday's trade down $0.5524 at $4.0560 gallon, after a session low of $4.0049 and high of $4.8353.
The NYMEX RBOB gasoline contract for April closed down $0.3113 at $2.9749 gallon. The intraday low was $2.8972 versus high of $3.4079.
The U.S. Dollar Index retreated by 0.694 points to 98.765 against a basket of foreign currencies.
Energy prices tumbled after Trump announced a five-day grace period on Monday to allow for ongoing diplomatic endeavors between the U.S. and Iran. "We've had very, very strong talks. We'll see where they lead. We've had major points of agreement," the president told reporters. Trump's stance effectively postponed U.S. strikes against Iranian power plants that he had threatened if Iran did not reopen the blockaded Strait of Hormuz within 48-hours.
The strait, bordering Iran and Oman and serving as the artery for Middle East oil exports, provides passage to some 20 million bpd of petroleum liquids.
Crude and product futures, however, came off session lows after Iranian Parliament Speaker Mohammad-Bagher Ghalibaf denied any negotiations had occurred with the U.S. earlier identified Ghalibaf as Iran's lead negotiator in the diplomatic efforts cited by President Trump.
"The complexities of Iranian politics make this all hard to read since Ghalibaf has been coordinating some of the high-profile Iranian responses over the past three weeks," said Karim Bastati, energy analyst at DTN. "For the oil market, what matters is when the Strait of Hormuz reopens and when Iran will stop attacking regional energy infrastructure."
Iran has stepped up strikes on the energy infrastructure of its neighbors after an Israeli attack on its largest natural gas field on Wednesday, March 18. The Paris-based International Energy Agency reports damage to 40 energy assets across nine countries.
Adding to Monday's market volatility were reports that the U.S. was not wavering in sending thousands of more troops to the Middle East. Israel's military also said it will continue a wide-scale wave of air raids in Tehran. Iran, in response, said it will launch counterstrikes.