DTN Oil Update
Oil Rally Fades as Contract Expiry Looms
SECAUCUS, NJ (DTN) -- Oil prices settled up modestly Monday as contract-expiry volatility and lingering U.S. fuel policy uncertainty offset session highs triggered by U.S. President Donald Trump's rejection of Iran's Middle East truce proposal.
Most NYMEX futures rallied earlier in the day, responding to Trump's turning down over the weekend of a Tehran offer to lift its blockade of the Strait of Hormuz in exchange for an end to the U.S. naval embargo. Media reports of Washington considering renewed military strikes against Iran after the midterm elections stoked fears that Middle East supply disruptions could stretch into November.
Crude futures, however, surrendered the bulk of their gains into the close amid profit-taking and contract roll-over dynamics ahead of front-month futures expirations.
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NYMEX October ULSD and RBOB contracts entered their final two sessions ahead of Wednesday's expiry, triggering widespread position squaring.
NYMEX November WTI crude rose $0.19 to settle at $92.60 bbl, well off its session peak of $96.54. November WTI traded as low as $91.25 during the session.
ICE November Brent settled up $0.96 at $105.28 bbl after touching an intraday high of $108.83.
That caused the Brent-WTI spread to blow out to around $13 bbl, reflecting ongoing market worries that potential U.S. diesel export limits would force domestic refiners to cut throughput, dampening U.S. crude demand while tightening foreign markets.
Physical supply indicators stayed mixed as Middle Eastern crude exports rebounded to multi-month highs, though prompt Brent spreads remained heavily backwardated at above $7 bbl, keeping the front of the curve firmly supported.
Downstream, NYMEX October ULSD gained $0.0706 to settle at $4.7553 gallon after reaching an intraday high of $4.9079.
NYMEX October RBOB turned negative into the close, retreating $0.0557 to settle at $3.3377 gallon after peaking at $3.4566 earlier in the day.
By 2:26 p.m. EDT, the U.S. dollar index gained 0.172 points to 100.880 against a basket of currencies.
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