DTN Oil Update
Oil Down as US-Iran Talks Begin, 6-Week Rally to End
SECAUCUS, N.J. (DTN) -- Crude to oil product futures were down Friday morning, Feb. 6, heading for their first weekly drop in seven weeks, as the start of U.S.-Iran talks pared supply risks across energy markets.
Iran's Foreign Minister Abbas Araghchi was quoted telling reporters that the talks in Oman got off to a "good start" and that negotiators will return to their capitals for consultation, before the continuation of more discussions at a date and venue to be decided later.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Tensions over Iran were largely responsible for January's 11% rally in crude as U.S. President Donald Trump repeatedly threatened the use of force unless Tehran engaged diplomatically with the White House, which wants to dismantle the Islamic republic's nuclear program.
Energy markets are closing following the talks due to concerns over the security of Middle East energy supplies. Iran produces 3.2 million bpd, according to OPEC, and straddles the Strait of Hormuz, where roughly a fifth of the world's seaborne oil trade passes.
The talks in Oman marked the resumption in negotiations that had been discontinued since June. Araghchi was quoted saying that the "wall of mistrust should be overcome" by the two sides despite reports of a standoff between U.S. negotiators wanting curbs on Iran's missiles too, while Iranian officials insisted that the talks should be limited to its nuclear program.
NYMEX WTI crude futures for March delivery were down $0.60, or 1%, to $62.69 bbl, extending the near-3% drop in the prior session. For the week, WTI was headed for a decline of 3.5%, ending a six-weekly rally.
April ICE Brent slid $0.43, or 0.6, to $67.12 bbl. Brent was on track to lose 5% on the week.
Downstream, March ULSD fell $0.0204 to $ 2.3728 gallon, while March RBOB futures eased by $0.0058 to $ 1.9208 gallon.
The U.S. Dollar Index slipped 0.151 points to 97.545, helping limit some of the downside in oil.