DTN Oil Update
Oil Steady Near 2-Week Highs on US-Iran Talks Uncertainty
VIENNA (DTN) -- Oil and product futures were little changed in a volatile morning session Thursday as market participants sought clarity over future U.S.-Iran truce talks that could ease the largest oil supply disruption in history as the closure of the Strait of Hormuz approached the eight-week mark.
By 08:45 a.m. EDT, NYMEX WTI crude for June delivery was up $0.72 at $93.68 barrel (bbl), while ICE Brent for June climbed $0.79 to $102.71 bbl.
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Downstream, NYMEX ULSD futures for May delivery retreated $0.0518 to $3.8861 gallon, and front-month NYMEX RBOB futures rose $0.0171 to $3.3750 gallon.
The U.S. Dollar Index inched up 0.098 points to 98.51 against a basket of foreign currencies.
Earlier this week, U.S. President Donald Trump extended indefinitely the ceasefire on Iran just hours before it was set to expire. Delegations from both countries have yet to meet for a second round of direct negotiations as the U.S. embargo on Iranian maritime trade continues. The lifting of the blockade on Iranian ports is one of Tehran's preconditions for any further negotiations. While Trump says talks may take place in Islamabad as soon as Friday, Iran has yet to state its willingness to meet.
Oil flows out of the Persian Gulf, meanwhile, remained at a near standstill as Iran reinstated its own blockade on the Strait of Hormuz, which during normal times provided passage to some 20 million barrels of petroleum liquids that make up a fifth of global supply.
Prior to the U.S. blockade on Iranian maritime trade, Iranian oil was with few exceptions the one undisrupted supply source from the Gulf. Iran also briefly allowed the Strait of Hormuz to be used by all vessels after Israel, the U.S. partner in the attacks on Iran, agreed to cease for ten days incursions into Lebanon in its war against Iran-aligned Hezbollah. That ceasefire also stands on shaky ground now.
The Middle East disruption to 20% of global energy supplies has led to soaring demand for U.S. crude oil and refined products. The Energy Information Administration (EIA) on Wednesday reported that petroleum exports last week soared to a record-high 12.88 million barrels per day (bpd), propelled by an unprecedented 8.09 million bpd in product exports.
Over the past four weeks, total petroleum exports have averaged 12.19 million bpd, 14% higher than in the same period last year. International demand for U.S. diesel, one of the fuels most affected by the current supply crisis, were over the last four weeks up more than 31% year-on-year.
EIA data also showed that commercial inventories of gasoline and distillate fuel oil shrank by a combined 8 million bbl in the week ended April 17.