WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and Intercontinental Exchange Brent futures settled modestly higher Monday afternoon while NYMEX RBOB futures came under selling pressure, as market concerns over global oil demand countered heightened rhetoric regarding recent developments in the Middle East.
NYMEX August West Texas Intermediate futures expired $0.59 up at $56.22 barrel (bbl) and the next month delivery September contract settled at parity. ICE September Brent futures settled $0.79 higher at $63.26 bbl. NYMEX August RBOB futures ended Monday session 1.26cts down at $1.8279 gallon and the August ULSD contract advanced 0.99cts to settle $1.8995 gallon.
An overnight rebound in oil futures softened Monday after U.S. Secretary of State Mike Pompeo indicated the United States would not intervene in securing the release of a British oil tanker seized by Tehran last Friday.
"The UK must be responsible for the safety of its own ships in the Gulf," said Pompeo during an interview Monday afternoon.
Though tanker freight rates spiked in response to hostilities in the world's most vulnerable chokepoint for oil transit, crude prices are not yet reflecting the full premium of geopolitical tensions in the region. Some analysts believe supply growth from non-OPEC countries, in particular the United States, is enough to offset temporary disruption of oil flow in the Middle East or elsewhere.
"There is a difference in the oil market this time around because non-OPEC is simply growing so fast. That is the real game changer and that's why the price action is relatively benign," said a Morgan Stanley analyst on Monday.
Oil futures traded at a one-week high earlier in the session on reports Iran's Revolutionary Guard intercepted a British-flagged oil taker in the Strait of Hormuz, a water passage for one-fifth of the oil moved globally. Following the incident, British government called on ships with UK interests to "stay out of the area for an interim period," while vowing to work with allies to secure safe passage.
Libya's National Oil Corporation restarted the Sharara oilfield and lifted force majeure on crude exports from the Zawiya terminal, the company said on Monday. According to Reuters, the country's largest oil field, with a daily average output of 315,000 bpd currently operates at half of the capacity following restart of oil flow through a key pipeline. The country's crude production tumbled to 1 million barrels per day (bpd) over the weekend -- the lowest output rate since the beginning of April after an unidentified group sabotaged the pipeline in Libya's southern province.
Market participants will pay close attention to U.S. inventory levels this week amid ongoing downward revisions in global demand forecast and fear of an oversupplied market. American Petroleum Institute will publish its weekly rundown of supply statistics 4:30 p.m. EDT Tuesday, while Energy Information Administration will release official figures at midmorning Wednesday.
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