Oil Up to Start Friday

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rose in early trading Friday as market participants digest reports that Iran could be preparing to restart its idled nuclear plant should the United States re-impose sanctions on or before a May 12 deadline.

Near 9:15 AM ET, NYMEX June West Texas Intermediate futures were up $0.14 at $68.57 bbl, with ICE July Brent up $0.09 to $73.71 bbl. NYMEX June RBOB futures were up fractionally to $2.0911 gallon with the June ULSD contract more than 1.0cts higher at $2.1254 gallon. Should the U.S. re-impose sanctions on Iran, analyst estimate exports of crude oil from the oil producing nation could decline by 300,000 bpd to as high as 1.0 million bpd.

"We were higher overnight on reports that an Israeli satellite firm detected unusual activity around Iran's Fordo nuclear plant," said Phil Flynn, senior market analyst with the Price Futures Group. "There's concern that if the US re-imposes sanctions, Iran would restart its nuclear program. That gave us a little bit of support."

Reuters also reported Thursday Iran's foreign minister said U.S. demands to change its 2015 nuclear agreement with world powers were unacceptable, as the self-imposed deadline set by President Donald Trump for Europeans to "fix" the deal loomed.

Traders are also concerned about declining crude output from Venezuela. Recent OPEC data through December 2017 indicates oil output from Venezuela has fallen nearly 11% year on year to 1.923 million bpd, down from 2.159 million bpd in 2016. Output was off more than 19% from 2015 levels, OPEC data indicates.

On the domestic front, weekly data from the EIA shows refinery utilization rates at 91.1% of capacity as of April 27, while net crude refiner inputs eased to 16.561 million bpd.

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