DTN Oil Update
Oil Prices Ease on Lebanon Ceasefire, Iran-US Talk Claims
VIENNA (DTN) -- Oil and product futures edged lower Tuesday morning after Lebanon announced a partial ceasefire between Israel and Hezbollah and U.S. President Trump claimed negotiations with Iran were ongoing and a reopening of the Strait of Hormuz was imminent.
By 07:30 a.m. EDT, ICE Brent for August delivery was down $1.09 to trade near $93.89 barrel (bbl) and NYMEX WTI for July delivery fell $1.07 to $91.09 bbl.
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Downstream, NYMEX ULSD futures for July delivery retreated $0.0387 to $3.6007 gallon and front-month NYMEX RBOB futures softened $0.0238 to $3.0609 gallon.
The U.S. Dollar Index edged down by 0.08 points to 99.065 against a basket of foreign currencies.
On Monday, Iranian state media reported the country has stopped any message exchange with the U.S. in protest of Israel's incursion into Lebanon. The ensuing rally in oil prices was short-lived after Trump said hours later that Israeli prime minister Benjamin Netanyahu had in a call agreed to halt attacks and that both sides had agreed to a ceasefire. Netanyahu partially contradicted these statements, saying Israeli military operations in southern Lebanon will continue. Beirut, meanwhile, said ceasefire talks will continue Tuesday and Wednesday.
The U.S. president also claimed talks with Iran were progressing "at a rapid pace" and said he expected a deal to extend the U.S.-Iranian ceasefire and reopen the Strait of Hormuz "next week." Iran's blockade of the waterway in response to U.S.-Israeli attacks has caused the largest oil supply disruption in history.
An uptick in tanker traffic through the oil chokepoint also weighed on prices. The Iranian navy on Tuesday claimed 24 commercial ships have traversed the strait over the past 24 hours with Tehran's permission.
Global oil and refined fuel inventories have dwindled at a rapid pace as nearly a fifth of global supply remained cut off for more than three months. Record-breaking international demand for U.S. oil and products also drew on domestic stocks. Last week, the Energy Information Administration (EIA) reported distillate fuel oil stockpiles have dropped to a 23-year low. The American Petroleum Institute's weekly inventory estimate is scheduled for release later Tuesday, followed by the EIA's petroleum status report on Wednesday.