DTN Oil Update
Oil Up as Iran Tensions at Fore, OPEC Pauses Hikes
SECAUCUS, N.J. (DTN) -- Crude futures rose on Tuesday, Feb. 3, after the U.S. military shot down an Iranian drone in the Persian Gulf, reigniting tensions in the Middle East.
OPEC's reaffirming of its pledge to curb output in the first quarter -- along with President Donald Trump's announcement of a U.S. trade deal with India -- helped the market rebound on the day.
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NYMEX WTI crude futures for March delivery settled up $1.07, or 1.7%, at $63.21 bbl, after Monday's 5% drop. ICE Brent for April delivery closed up $1.03. or 1.6%, at $67.33 bbl.
Among refined products, front-month ULSD futures closed up $0.0495 at $ $2.4093 gallon while RBOB for March delivery finished up $0.0272 at $ $1.8979 gallon.
The U.S. Dollar Index slid 0.212 points to 97.28 against a basket of currencies, boosting the prices of oil and fuel contracts priced in the greenback.
Market focus was largely on Iran as the U.S. and Iranian officials announced during the weekend that they would hold talks. However, NYMEX WTI futures crude jumped almost $2 bbl Tuesday afternoon after the U.S. military shot down an Iranian drone that approached the USS Lincoln aircraft carrier in the Arabian Sea. Any escalation involving Iran or elsewhere in the Middle East could trigger and sustain a prolonged rally in crude prices. Iran produces nearly 3.2 million bpd in a region that accounts for a third of world output, according to OPEC.
The United States will cut tariff on Indian imports to 18% from 25%, President Donald Trump said on Monday after a phone call with Prime Minister Narendra Modi. Additionally, the U.S. will cancel a separate 25% tariff imposed on India for its purchases of Russian oil.
Separately, eight OPEC+ countries on Monday reaffirmed they will pause output hikes through March, with Iraq, Kazakhstan, Oman and the UAE agreeing to compensate for past overproduction.
On the U.S. inventory front, the American Petroleum Institute will release weekly U.S. inventory estimate at 4 p.m. EST, followed by official stockpiles data from the Energy Information Administration (EIA) Wednesday.
The EIA reported last week that U.S. commercial crude oil stocks dropped by 2.3 million bbl to 423.8 million during the week ended Jan. 23, after back-to-back weekly builds of 3.6 million and 3.3 million bbl.