DTN Oil Update
Brent Reaches 4-Week High as Hormuz Reopening Chances Dim
VIENNA (DTN) -- Oil futures continued to rise Wednesday morning amid signs the energy supply disruption in the Persian Gulf is set to drag on, sending front-month Brent futures to their highest since March 31.
By 8:25 a.m. EDT, ICE Brent for June delivery rose $3.51, or 3.2%, to $114.77 bbl, after advancing to $115.64 bbl earlier in the session. NYMEX WTI crude for June delivery was up $3.47, or 3.5%, to trade near $103.40 bbl.
Downstream, NYMEX ULSD futures for May delivery appreciated $0.1073 to $4.0785 gallon, and front-month NYMEX RBOB futures advanced $0.0896 to $3.65 gallon.
The U.S. Dollar Index was little changed, hovering around 98.545 points against a basket of foreign currencies.
Prospects of a near term conclusion to the now double blockade of the Hormuz chokepoint dimmed over the past two weeks as U.S. and Iranian negotiators failed to meet for peace talks. While a ceasefire is holding, Tehran and Washington have recently stepped up their bellicose rhetoric and signaled an unwillingness to compromise on key issues as the waterway remains impassable to tankers carrying a fifth of global petroleum supply.
The White House rejected a peace proposal last week which it said did not address Tehran's nuclear enrichment. At the same time, the U.S. continues to enforce its embargo on Iranian maritime trade, the lifting of which is Tehran's key condition for further peace talks. Media reports late Tuesday, April 28, suggested a continuation of the U.S. embargo, which had triggered Iran to resume its own Hormuz blockade after a one-day reprieve.
The supply shortage has put a strain on global inventories and led to a surge in U.S. oil and fuel exports.
The American Petroleum Institute (API) on Tuesday reported that domestic petroleum inventories continued to shrink last week. API estimated gasoline and distillate fuel oil stocks declined by 8.5 and 2.6 million bbl, respectively, extending the prior week's declines of 4.6 and 3.4 million bbl. The U.S. Energy Information Administration's weekly oil balance sheet is scheduled for 10:30 a.m. EDT release.
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