DTN Oil Update
WTI Drops to $63 Ahead US-Iran Nuclear Talks
SECAUCUS, N.J. (DTN) -- Crude and refined product futures fell nearly 3% on Thursday ahead of the start of U.S.-Iran nuclear talks in Oman amid concerns about global supply fundamentals. Some of the downward pressure on oil futures prices was offset by two consecutive weeks of U.S. crude inventory declines reported by the Energy Information Administration (EIA) on Wednesday.
Oil traders are closely watching the outcome of the meeting between U.S. and Iranian officials in Oman on Friday, out of concern for Middle East oil supplies amid repeated threats of force by U.S. President Donald Trump if Tehran does not comply with demands.
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The meeting will resume negotiations that have been discontinued since June.
As part of the negotiations, the U.S. seeks to dismantle Tehran's nuclear program and scale back its missile capabilities, while Iranian officials say some of these are non-negotiable.
Thursday's market tumble reinforced the volatility seen in energy prices amid rapid escalation and pullback in tensions over Iran, which produces 3.2 million barrels per day (bpd), according to OPEC.
Prior to this, civil unrest in Iran, which human rights groups say killed thousands, sparked a 14% crude rally in January.
On the U.S. supply front, commercial crude stocks fell 3.5 million barrels (bbl) during the week ended Jan. 30, adding to the prior week's decline of 2.3 million bbl. The decline came on the back of the January 22-27 Winter Storm Fern, which affected refining production in various regions.
NYMEX WTI crude for March delivery settled down $1.85, or 2.8%, at $63.29 bbl, after rallying 3% in the prior session. April ICE Brent fell $1.91, 2.7%, to finish at $67.55 bbl, following a 3.2% upward move on Wednesday.
March ULSD finished down $0.0768 at $ 2.3932 gallon, while March RBOB futures eased by $0.0386 to close at $ 1.9266 gallon.
The U.S. Dollar Index climbed 0.191 points to 97.68 against a basket of currencies, adding to the pressure on commodities denominated in the greenback, that include crude and fuel products.