DTN Oil Update
Oil Begins April Lower as Trump Signals End to Iran War
SECAUCUS, N.J. (DTN) -- Energy prices fell broadly Wednesday, although crude stayed above $100 barrel (bbl) as market participants awaited U.S. President Donald Trump's announcement on when the Iran war will end, following the White House's scheduling of an update later in the day on the month-long conflict.
Trump is to speak at 9.00 p.m. EDT on Wednesday to give "operational updates and tout success in achieving the goals in Iran", a White House official was cited saying by media reports. Trump was, meanwhile, reported to have briefed Saudi Crown Prince Mohammed bin Salman Wednesday on the possibility of a ceasefire.
The White House update also follows remarks by Prime Minister Benjamin Netanyahu on Tuesday that he believed Iran no longer posed an existential thread to Israel, his first such observation in years.
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Trump has floated talk of a ceasefire since last week as the U.S.-Israeli airstrikes on Iran that began on Feb. 27 neared its first full month. On Wednesday, he wrote on his social media that Iran had requested a ceasefire, an announcement swiftly denied by Tehran.
Iran has said regardless of how the war progresses or ends, it will control the flow of tankers on the Strait of Hormuz, which it blockaded soon after the outbreak of fighting. The narrow waterway, adjacent to the Persian Gulf and bordered by Iran and Oman, used to be a transit point for 20 million bpd of petroleum liquids, mostly of Middle East origin. Iran has only allowed about 10% of that through, granting access to non-U.S.-Israel allies. It has also fired missiles over the last month at oil and gas facilities and crude tankers in neighboring countries, further impeding global supply and sending prices higher.
Trump had initially threatened attacks on Iranian oil infrastructure and power plants if the Hormuz was not reopened. But on Wednesday he said that was no longer a U.S. problem, telling countries short on jet fuel to buy from the U.S., which he said had plentiful supply.
Despite signs of a quick de-escalation to the Middle East situation, analysts said it may take a while to bring energy prices back to pre-war levels. Brent rose a record 94% in the first quarter while ULSD surged 101%.
By 2:35 p.m. EDT on Wednesday, NYMEX WTI crude futures contract for May delivery was down $1.05, or 1%, to $100.33 bbl. WTI was pressured partly by weekly inventory data from the Energy Information Administration (EIA), showing U.S. crude stocks rose a sixth consecutive week, climbing 5.5 million bbl to 461.7 million. ICE Brent futures contract for June delivery slid $2.42, or 2.33%, to $101.55.
NYMEX RBOB futures for May delivery slipped by $0.1072 to $3.0967 gallon, while front-month ULSD futures slid $0.0434 to $4.0704 gallon.
The EIA said gasoline stocks fell by 500,000 bbl to 240 million and distillate balances slid by 2.1 million to 117.8 million. Jet fuel inventories eased by 300,000 bbl to 44 million bbl.
The U.S. Dollar Index moved down 0.324 points to 99.435 against a basket of foreign currencies.