Oil Futures Up Amid Iran Rocket Attack

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were mixed in early trading Friday following Thursday's headline-driven rally that caused prices to spike to levels last seen in late-2014.

Friday Fox news reports the White House has condemned recent Iranian actions, calling Thursday's attack on Israel by Iran "(an) unacceptable and highly dangerous development for the entire Middle East." Fox also mentioned next week's opening of the U.S. embassy in Jerusalem as adding to regional instability.

Thursday's price rally, which fueled spot futures values for West Texas Intermediate, Brent crude and RBOB gasoline to levels last seen in late-2014, follows market reaction to U.S. President Donald Trump's decision Tuesday to pull out of the Iran nuclear deal, potentially reducing crude oil exports from Iran by as much as 1.0 million bpd.

Near 9:00 AM ET, NYMEX June WTI futures were up a penny at $71.37 bbl, with ICE July Brent off $0.09 to $77.38 bbl. NYMEX June RBOB futures were up fractionally to $2.1920 gallon with the June ULSD contract slightly lower at $2.2219 gallon.

"I think what we're seeing is some light profit taking right now ahead of the weekend," said Elaine Levin, president of Washington D.C.-based PowerHouse, a commodity hedge and trade advisory. "We're hearing that all of the banks continue to raise their targets for crude oil (above $80 bbl) as a result of the Iranian situation."

Levin said there also are reports circulating that the Saudis, Russians and other members of the Organization of the Petroleum Exporting Countries may be unwilling to make up the Iranian export shortfalls.

"I don't think we've seen all the reverberations of this action yet," Levin said.

Traders said Wednesday's Energy Information Administration weekly supply report remains bullish for oil markets, especially motor gasoline. EIA reported total motor gasoline inventories fell 2.2 million bbl on the week to 235.8 million bbl, 2.2% less than the same week in 2017 but still in the upper half of the average range.

Gasoline production fell 71,000 bpd to 9.974 million bpd last week, down 0.8% versus a year earlier. Total motor gasoline imports, which include both finished gasoline and gasoline blending components, fell 120,000 bpd to 803,000 bpd during the week-ended May 4, sliding nearly 16% from a year earlier. Implied demand for the fuel continued higher, soaring 685,000 bpd to 9.775 million bpd, 3.9% above a year ago.

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