DTN Oil Update
WTI at $83 as Middle East Risk Appetite Tumbles
SECAUCUS, N.J. (DTN) -- Oil prices fell more than 12% Tuesday, deepening the retreat that began after the previous day's rally to nearly $120 bbl, as a potential de-escalation in the Iran conflict triggered a massive directional shift on both the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE).
The NYEMX WTI futures contract for April delivery settled down $11.32 at $83.45 bbl after a session low of $76.73. Just a day ago, it hit a four-year high of $119.48 bbl.
ICE Brent for May delivery closed down $11.16 at $87.80 bbl, having touched a floor of $81.16 bbl earlier. On Monday, March 9, it scaled $119.50 bbl, its highest since Russia's invasion of Ukraine in 2022.
Refined products also extended losses, following Monday's rally that pushed both gasoline and ULSD futures to their highest levels since July 2022.
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By 3:30 p.m. EDT, NYMEX gasoline for April delivery had declined by $0.0987 to $2.6650 gallon, retreating from a $3.2205 gallon high recorded the previous session.
The front-month ULSD contract shed $0.1696 to $3.4170 gallon, after hitting $4.4715 gallon on Monday.
The U.S. Dollar Index weakened by 0.386 points to 98.78, providing a slight offset to the broader downward pressure on energy commodities.
The volatility oil markets saw in 36 hours were unlike any in years, as the front-month contracts in both WTI and Brent rose almost $30 bbl from Friday's settlement before giving all of it and more back at Tuesday's close.
"Like rats fleeing from a sinking ship, longs were getting out of oil today" a hedge fund manager in oil told DTN. "The war isn't exactly over but there is talk all over the markets that things had gotten too hot that they have to cool."
The shift in risk appetite came after U.S. President Donald Trump signaled on Monday that an end may be near to the hostilities in the Middle East after heightened U.S.-Israeli bombings in Iran and Tehran's retaliatory fire at its neighbors.
The White House's Press Secretary Karoline Leavitt told reporters on Tuesday that Trump and his energy team were closely monitoring the oil markets while deciding on the next course of action for the Middle East.
A media report also said the U.S. has Israel to halt strikes on Iran's energy infrastructure.
Prices remained underpinned for now by continued production disruptions and storage constraints caused by the war, which entered its 11th day. The Strait of Hormuz remained off limits on Tuesday to tankers that carry some 21 million bpd of assorted petroleum cargoes as Iran maintained its threat to strike vessels on the narrow waterway.
G7 finance ministers are, meanwhile, weighing a collective release of 300 million to 400 million bbl from their emergency reserves of 1.2 billion bbl to stabilize volatile market conditions.
Traders are now turning their attention toward the American Petroleum Institute's (API) weekly inventory data, scheduled for release after 4:30 p.m. EDT. This report will offer the first look at U.S. crude, gasoline, and distillate stock levels since the onset of the conflict, providing a critical assessment of the current supply landscape.