DTN Oil Update
Oil Tumbles 3% as Iran Focus Triggers Market Swings
SECAUCUS, N.J. (DTN) -- Crude oil product futures tumbled about 3% in morning trade Thursday as optimism that U.S.-Iran talks would avert war between the two sides scaled down risks to Middle Eastern energy supplies.
The two countries announced on Wednesday they would meet in Oman on Friday to resume negotiations discontinued since June. The U.S. says it wants to dismantle Iran's nuclear program which it fears would enable the Islamic republic to assemble an atomic bomb one day to strike at Israel. The Iranian government denies the assertion.
Oil prices have swung heavily in recent days amid saber rattling by the two sides in the run-up to the talks, including incidents involving their navies in the Persian Gulf, which provides passage to a fifth of the world's crude cargoes. In the latest escalation reported on Thursday, Iran seized two foreign oil tankers, according to the Associated Press, which cited state television as claiming the vessels were smuggling fuel.
The downside in oil prices was, however, limited by lower U.S. crude inventories over two consecutive weeks reported by the Energy Information Administration on Wednesday.
Commercial crude stocks dropped by 3.5 million barrels (bbl) to 420.3 million during the week ended Jan. 30, for the second consecutive week, said the EIA. The decline came in the aftermath of Winter Storm Fern, which led to production outages of approximately 2 million barrels per day (bpd) in the Permian Basin in Texas and New Mexico.
NYMEX WTI crude futures for March delivery were down $1.75, or 2.8%, to $63.39 bbl, after a 3% rise at Wednesday's close. ICE Brent crude for April delivery fell by $1.86, or 2.7%, to $67.60 bbl.
ULSD futures for March slid by $0.0789 to $2.3911 gallon, and RBOB for March delivery eased by $0.0298 to $1.9354 gallon.
The U.S. Dollar Index strengthened 0.101 points to 97.590 against a basket of foreign currencies.
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