Oil Futures Bounce off Session Lows

Washington, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude moved off morning lows to settle higher during uneventful trade Tuesday with the market refocusing on geopolitical risks amid a tightening supply-demand disposition.

Oil futures were boosted by the reports that Iran's crude oil exports dropped below 1 million barrels per day (bpd) in April, the lowest level so far this year, according to tanker tracking data. The Refinitiv Eikon Group said on Tuesday the average rate of Iranian exports this month is at least 150,000 bpd less than estimates for March, pointing to lower global demand for sanctioned barrels. According to a Reuters report, U.S. sanctions have already halved oil exports from Iran, despite waivers being granted to several large purchasers of its crude.

Adding to supply risks, the U.S. Treasury slapped additional sanctions on Venezuela's oil sector, targeting four more shipping companies operating in the country and nine additional vessels owned or operated by Venezuela state-run oil company PDVSA. The latest data from the International Energy Agency showed Venezuelan oil production collapsed 270,000 bpd in March to a long-term low of 870,000 bpd.

Upside was limited by bearish Federal Reserve data, showing industrial output fell 0.1% in March, pulled down by trade tensions with China and slowing global economy. Federal data showed manufacturing production fell at 1.1% in the first quarter, while U.S. economic output slowed to a 2.2% in the last three months of 2018 from 3.4% in the third quarter, pointing to a downward vector in domestic economy. The Federal Reserve is due to publish its Beige Book on Thursday at 2:00 p.m. ET, providing a detailed summary of business activity across Federal Reserve member banks.

Uneven trading session comes ahead of the weekly rundown of U.S. supply data with calls for U.S. crude stocks to have risen by 1.9 million bpd last week, a fourth weekly addition. The American Petroleum Institute, an industry group, issues its supply report at 4:30 p.m. ET for the week ended April 12, ahead of Wednesday's official figures from Energy Information Administration. Nymex May West Texas Intermediate futures settled $0.65 higher at $64.05 per barrel (bbl). May WTI options expired this afternoon. The June WTI futures contract settled at a $0.14 premium to the May contract.

ICE June Brent crude settled up $0.54 at $71.72 bbl, with the calendar spreads narrowing in the inverted market.

Nymex May RBOB futures settled up 1.99 cents at $2.0317 gallon while May ULSD futures rose 2.12 cents to $2.0822 gallon, settling near Friday's $2.0888 five-month spot high.

Liubov Georges can be reached at liubov.georges@dtn.com