DTN Oil Update
WTI Trades Below $70 on Middle East Peace Deal Hopes
HOUSTON (DTN) -- Oil futures dropped below the $70 mark to close the week on Friday, hitting a third straight weekly decline. The drop was driven in part by the normalization of oil shipping through the Strait of Hormuz, alongside growing expectations of a peace agreement in the Middle East after Israel and Lebanon signed a framework agreement today.
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The NYMEX WTI for August delivery fell $2.74 to $69.18 bbl, while the front-month ICE Brent crude futures contract declined by $3.44 to trade near $71.82 bbl.
Downstream, NYMEX ULSD futures for July delivery dropped $0.0924 to $3.2058 gallon, and front-month RBOB futures slid $0.0775 to $2.9498 gallon.
The U.S. Dollar Index fell by 0.53 points to 101.140 against a basket of foreign currencies.
The Associated Press reported that Secretary of State Marco Rubio joined Israel's and Lebanon's ambassadors on Friday to announce a framework agreement, marking what officials described as a first step toward peace after months of fighting between Israel and Hezbollah. However, the officials did not disclose any details about the agreement.
The announcement came one day after Iran struck a cargo ship on Thursday testing the fragile ceasefire, though both Washington and Tehran quickly signaled their intention to keep the waterway open.
The scale of outbound flows, estimated to have averaged 12 to 15 million bpd over the last three days, contributed to bearish market sentiment. While many producers in the region have restarted cargo loadings in recent days, inbound traffic of empty tankers remained well below pre-war levels.
Although crude futures have erased almost all of their wartime gains, refined product futures continued to trade considerably above prices on Feb. 27. The reopening of the Strait of Hormuz freed up crude supplies, but the three-month long lull in global fuels production resulting from the limited availability of crude oil and high prices will take longer to end as refiners start to ramp up operations amid a restoration of supply chains.