Oil Futures Little Changed Tuesday

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mixed on Tuesday, weighed down by a set of competing factors including concern over a protracted U.S.-China tariff fight and global supply disruptions.

NYMEX July West Texas Intermediate futures settled up $0.51 at $59.14 per barrel (bbl), with ICE July Brent finishing the session unchanged at $70.11 bbl. International crude Brent contract is trading just below an $11 bbl premium to the U.S. WTI benchmark, the widest spread in a year. NYMEX June ULSD futures were up 2.12 cents near $1.9925 gallon, with the June RBOB contract 2.22 cents higher at $1.9567 gallon.

Market participants continue to closely watch geopolitical tensions in the Middle East, after Pentagon announced the decision to bolster U.S. military presence in the region. Contradictory to this policy shift, U.S. President Donald J. Trump signaled a softer line on Iran, while stating he was not seeking regime change in Tehran.

"No nuclear weapons for Iran and I think we will make a deal," Trump said, easing some concern of impeding military confrontation with Iran. Separately, Reuters reported Russian oil exports to Europe tumbled nearly 6% in May, as contaminated crude with organic chloride still lingers within the 1.4 million barrels per day (bpd) Druzhba pipeline. The tainted oil crisis pressed the country's production down to 11.126 million bpd this month, down 55,000 bpd from the target Moscow agreed to under OPEC+ deal. According to the report, Russia's Transneft—the Druzhba pipeline operator managed to take out only 2 million metric tones of tainted oil in an already a month-long effort.

Some analysts believe the crisis provides Russia with additional argument to not take part in an extension of OPEC+ production cuts in June. As part of international deal to curb production, Russia agreed to trim output by 230,000 bpd from January to June, reversing from a post-Soviet record high of 11.421 million bpd set in October of last year.

In U.S.-China news, U.S. President D. Trump said on Monday the country is "not ready" to make a trade deal with China, pointing to a protracted trade war with the world's second largest economy. Bloomberg economists estimate global growth could take up to a $600 billion hit in the next two years if tariffs expanded to include all U.S.-China trade. The Dow Jones Industrial Average and the broader U.S. stock market pivoted lower Tuesday afternoon, with S&P 500 retreating 0.72% in the market-on-close trading. U.S. dollar strengthened on Tuesday to 97.842, adding downward pressure on WTI futures.

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