DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures edged higher Monday morning but remained near four-month lows after the U.S. and Iran agreed to halt attacks following a brief flareup of hostilities over the weekend.

By 8:15 a.m. EDT, ICE Brent for August delivery was up $0.54 to trade near $72.53 bbl, and NYMEX WTI for August delivery rose $0.78 to $70.01 bbl.

Downstream, NYMEX ULSD futures for July delivery advanced $0.0422 to $3.2504 gallon, and front-month RBOB futures rose $0.0378 to $2.9949 gallon.

The U.S. Dollar Index softened by 0.127 points to 101.0 against a basket of foreign currencies.

While loadings in the Persian continued despite Iran on Saturday attacking a laden tanker, vessel traffic did slow in response to the renewed security threat. The U.S. in response carried out strikes on Iranian missile launch sites. After another exchange of fire on Sunday, both sides agreed to halt attacks, blaming each other for the ceasefire breach.

Oil and LNG exports have been steadily rising since Washington and Tehran agreed to lift their blockades on the Strait of Hormuz. The memorandum of understanding also extended the ceasefire into August to allow for negotiations over a permanent end to the conflict. U.S. President Trump on Monday said that peace talks are set to resume Tuesday in Doha at Iran's request.

Ukraine, meanwhile, has over the past two months intensified attacks on Russian refineries and oil depots, including targets deep behind the front line. Russian officials openly mulling a diesel export ban to combat fuel shortages added to global supply woes.

Soaring energy prices and limited crude oil availability caused by the largest supply disruption in history have also negatively impacted oil demand. Market participants will continue to carefully parse macroeconomic indicators to gauge how much of this demand destruction was transient, and by how much the inflationary pressures of the last four months have stymied growth. Several manufacturing and service indices for the world's two largest oil consuming nations, the U.S. and China, are scheduled for release this week, including the Institute for Supply Management's U.S. manufacturing PMI for June on Wednesday.