DTN Oil Update
WTI Clings to $91 on New US-Iran Talks Effort, EIA Data
SECAUCUS, N.J. (DTN) -- Oil futures settled steady in choppy trading Wednesday as diplomats from Washington to Islamabad and Tehran worked on scheduling a new round of peace talks in the Pakistani capital aimed at ending the Middle East conflict.
Also supporting energy markets were weekly declines across the board in U.S. crude, gasoline, and distillate inventories as reported by the Energy Information Administration (EIA).
NYMEX WTI crude for May delivery settled up $0.01 at $91.29 bbl. The ICE Brent contract for June settled up $0.14 at $94.93 bbl.
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Downstream, diesel proxy NYMEX ULSD ended trading for the May contract up $0.1289 at $3.7532 gallon. In gasoline, NYMEX RBOB futures for May closed up $0.0297 at $3.0692 gallon.
The U.S. Dollar Index inched down 0.068 points to 97.84 against a basket of foreign currencies.
A stream of both positive and negative headlines on the Middle East conflict led to choppy price moves throughout the day in energy markets.
U.S. President Donald Trump suggested that the war with Iran could end within the week. Media reports said the president could be in Islamabad for the signing of a peace deal if an agreement is reached between White House and Iranian negotiators, after Sunday's failure of the first round of discussions.
Yet talk earlier in the day of a potential extension to the ceasefire on Iran that ends April 21 suggested the timeline for an agreement could drag. Energy risk premiums have softened since the ceasefire announced April 7, yet the physical movement of Middle Eastern crude remains severely restricted.
A potential peace agreement holds the promise of fully reopening the Strait of Hormuz, which has remained largely shuttered since hostilities erupted 45 days ago. Normalizing transit for approximately 20 million bpd of petroleum liquids typically flowing through the waterway could significantly depress global energy prices.
While Tehran has permitted selective tanker traffic through the Hormuz, a U.S. naval blockade initiated Monday, April 13, tightened the noose on Iranian maritime trade. The U.S. Navy interdicted two tankers attempting to depart Iran on Tuesday, April 14, and the Treasury Department said it will not extend sanctions waiver on Iranian oil expire this weekend. Iran, on its part, said Wednesday it intends to maintain control over its waters in the Hormuz and neighboring Oman.
Market participants also remain wary of renewed fighting if the two-week ceasefire expires without a formal extension. Israel, the U.S. partner in the Middle East conflict, said Wednesday it was ready to resume attacks if needed.
In the U.S., the EIA said crude stocks fell by 900,000 bbl to 463.8 million bbl last week, after a prior seven-week build left inventories at a more than three-year high of 464.7 million.
Gasoline inventories fell by 6.4 million bbl to 232.9 million bbl during the week ended April 10, the EIA said. Distillate fuel balances fell by 3.1 million bbl to 111.6 million bbl.