Oil Futures Sharply Higher Monday

OLD BRIDGE, N.J. (DTN) -- New York Mercantile Exchange West Texas Intermediate crude oil futures and Brent crude oil on the Intercontinental Exchange settled sharply higher Monday on bold statements by Israeli Prime Minister Benjamin Netanyahu claiming he has proof that Iran has been lying about its nuclear ambitions.

NYMEX May New York Harbor ultra-low sulfur diesel, and RBOB gasoline expired Monday with June assuming the prompt month spot position. June Brent crude also expired, with July the new prompt month.

NYMEX May ULSD rose 1.65 cents to expire at $2.1674 gallon, a fresh 38-month spot high. May RBOB gasoline rose to expire at an eight-month spot high of $2.1292 gallon, a 0.23-cent increase.

June WTI jumped $0.47 per barrel (bbl) to settle at $68.57 barrel, while like-month Brent crude futures rose $0.53 to expire at $75.17 bbl. Brent expired at the highest settlement value on the spot continuation chart since Nov. 26, 2014, when it settled at $77.75 bbl. July WTI rose $0.50 to settle at $68.49 barrel, while July Brent, now the prompt month, traded $0.90 higher to end at $74.69 bbl.

Prices began rising well ahead of Monday's press briefing by Netanyahu.

"Oil prices reversed direction today on the news that Israeli Prime Minister Netanyahu [had] intelligence suggesting Iran was cheating on their P5+1 nuclear deal," said Phil Flynn, senior market analyst with The Price Futures Group prior to a 1 p.m. EDT press briefing by the Israeli prime minister. "Renewed sanctions on Iran would be bullish for oil because supplies are already tight."

At the Fox News briefing, Netanyahu said Iran "lied on its nuclear activities. Project Amad represents the equivalent of 5 Hiroshima bombs to be put on ballistic missiles," he said.

Following the briefing, NYMEX contracts soared to new spot highs

"The nuclear deal gives Iran a clear path to a nuclear arsenal," Netanyahu said.

U.S. President Donald Trump, at a 1:39 p.m. EDT joint news conference with Nigerian President Muhammadu Buhari commented on the Iranian intelligence, stating, "In seven years that deal will have expired... and Iran will be allowed to pursue nuclear weapons. That is just not acceptable."

"We'll see what happens, but when we look at what's happening today and what we've learned, this shows I have been 100% right," Trump said.

Iran, for its part, said there is no "Plan B" to the existing accord, and that "it's either all or nothing." Meanwhile, reports continue to circulate that oil traders may already be steering clear of Iranian oil contracts valid after May 12. Estimates from FGE and Gunvor SA say that 500,000 barrels per day (bpd) of Iranian crude oil exports could be at risk this year because of U.S. sanctions.

Futures have been trending higher recently, bolstered last week following statements from U.S. Secretary of State Mike Pompeo who said Trump was unlikely to recertify the current Iranian nuclear deal without "substantial changes."

NYMEX oil products prices, specifically RBOB gasoline, recently have been bolstered by strong U.S. demand, despite bearish weekly Energy Information Administration gasoline data showing an 800,000 bbl build to 236.8 million bbl for the week ended April 20.

Prices rose despite a weekly Baker Hughes oil rig report released Friday showing increases for the fourth consecutive week to 825 rigs, a rise of five from the prior report.

Baker Hughes reported companies added 28 oil rigs so far in the second quarter and 78 year-to-date. At 825, the U.S. oil rig count is at its highest since March 2015 while up 128 against year prior.

Total U.S. oil and gas rigs rose eight last week to 1,021, 151 more than a year ago, while in Canada, oil rigs slipped five to 33 while up nine on the year. The overall Canadian oil and gas rig count fell by eight to 85 which is flat against year ago.

Brian Whary can be reached at brian.whary@dtn.com