OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange were higher in early trading Monday amid continued violent protests in the Gaza Strip ahead of the opening of the new Israeli embassy in Jerusalem.
Tensions remain high Monday morning as weekend protests at the Israeli-Palestinian border continues Monday. As many as 26 Palestinians have been killed and scores injured during mass protests and border clashes, ahead of Monday's embassy opening. Protest also coincided with Sunday's celebration of the 70th anniversary of Israel's statehood.
Continued tensions in the Middle East have caused values for West Texas Intermediate (WTI), Brent crude and RBOB gasoline to spike to levels last seen in late-2014. The push for higher prices comes after U.S. President Donald Trump's May 8 decision to pull out of the Iran nuclear deal, potentially reducing crude oil exports from Iran by as much as 1.0 million barrels per day. Traders say recent headlines from the Mideast as well as reduced oil supplies from Venezuela, Mexico and Canada have added a $6 to $7 barrel (bbl) risk premium to world oil values.
Near 9 a.m. ET, NYMEX June WTI futures were up a $0.13 to $70.83 bbl, with ICE July Brent up $0.32 to $77.44 bbl. NYMEX June RBOB futures were fractionally higher at $2.1925 gallon, with the June ULSD contract $0.0064 higher at $2.2284 gallon.
"There are obviously some real strong geopolitical risk factors keeping prices higher right now," said Phil Flynn, senior market analyst with Chicago-based The Price Futures Group. "Also with the Iranian nuclear accord, we're hearing that the U.S. may consider penalizing countries that support Iran."
Flynn also mentioned recent data from the Organization of the Petroleum Exporting Country's (OPEC) Monthly Oil Market Report showing tightening world oil supplies. According to the report, OPEC revised global oil supply and demand expectations slightly higher while commercial oil inventory held by developed economies neared their five-year average, a goal for recent OPEC supply quotas.
OPEC's report said preliminary data showed commercial oil supply held by the 35-country bloc Organization for Economic Cooperation and Development were down 12.7 million bbl to 2.829 billion bbl in March, 9.0 million bbl more than their five-year average. The surplus above the average was in crude, which sat 12.0 million bbl above the five-year average at the end of March while oil products were 3.0 million bbl below the average.
Brian Whary can be reached at firstname.lastname@example.org
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