DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices edged higher in a choppy Monday morning session amid heightened uncertainty over the future of the U.S.-Iran war, while fresh bearish economic data from China capped gains.

By 8:55 a.m. EDT, ICE Brent for October delivery rose $0.81 to $89.33 bbl, and NYMEX WTI for September delivery advanced $0.65 to $83.05 bbl.

Downstream, NYMEX ULSD futures for September delivery climbed $0.0660 to $4.3489 gallon, while front-month RBOB futures inched up $0.0002 to $3.1843 gallon.

The U.S. Dollar Index softened by 0.209 points to 99.35 against a basket of foreign currencies.

Oil futures advanced by more than 5% last week after Iran stepped up attacks on tankers in the Strait of Hormuz and on neighboring energy infrastructure. Vessel tracking data showed traffic slowed markedly on the weekend. On Sunday, Israeli attacks on Lebanon stoked concerns of a broader escalation just ahead of the U.S.-Iranian ceasefire expiring.

Tehran has over the past weeks repeatedly denied White House claims of back-channel negotiations, insisting that U.S. attacks must cease before talks can resume. Iranian forces have during this time fired at tankers traversing the strait without the country's approval, leading to U.S. strikes on Iranian military assets and both sides accusing each other of violating the ceasefire. Reports suggested that both the U.S. and Iran were preparing for a broadening conflict ahead of the official end of the 60-day truce agreement late Monday.

Weaker-than-expected macroeconomic indicators out of China, meanwhile, amplified demand woes and weighed on prices. Official government data released overnight Monday showed retail sales expanded 0.6% year-over-year in July, falling short of analyst expectations of 1.5%. Growth in industrial production in the world's second largest oil consuming country slowed from 5.3% in June to 4.5% last month, compared to expectations of a 4.8% year-on-year expansion.

This week, market participants will be on the lookout for the latest U.S. industrial production data scheduled for release on Tuesday, followed by U.S. and European manufacturing PMIs on Friday.