DTN Oil Update
Oil Futures Drop on US-Iran Negotiations Outlook
HOUSTON (DTN) -- Oil futures dropped Monday on expectations of ample global supplies, as the United States and Iran reported progress in their nuclear negotiations, which potentially could lead to a lift on sanctions on Iranian oil trade.
The NYMEX WTI futures contract for May delivery dropped by $1.68 to $63.00 barrel (bbl), while the first-month ICE Brent settled at $66.19 bbl, down by $1.77 from the previous trading session.
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May RBOB gasoline futures increased by $0.0385 to $2.0603 gallon, while front-month ULSD futures for May delivery fell by $0.0391 to $2.1132 gallon.
The U.S. Dollar Index fell by 0.98 point to 98.150, against a basket of foreign currencies.
Last week, U.S. and Iranian officials met in Rome for a second round of negotiations to talk about Iran's nuclear program, which has exceeded the limits of uranium enrichment activities set in 2015.
The Trump administration has threatened to use military force if an agreement is not reached, according to media reports. However, if an agreement is reached, there is a possibility that the U.S. could lift sanctions on Iranian oil trade could put downward pressure on oil global prices.
The bearish sentiment in the oil futures market was also supported by an abundant global supply after the OPEC+ countries released an additional 2.2 million barrels per day (bpd) earlier this month, along with the unexpected announcement that the cartel will increase its oil supply by 411,00 bpd starting in May.
Concerns about the escalation in the trade tensions between the U.S. and China continue to set a bearish tone in the oil markets. "China firmly opposes any deal between the United States and its trading partners at the expense of Chinese interests, a spokesperson for the Ministry of Commerce said Monday morning," according to a Xinhua report.
The statement was in response to reports that the U.S. is planning to pressure its trading partners to restrict trading relations with China in exchange for tariff exemptions.
The U.S. sanctioned a second independent refinery in China's Shandong province last week, accusing it of receiving dozens of shipments of crude oil from Iran worth more than $1 billion. Some of the oil came from a front company for Iran's paramilitary Revolutionary Guard, U.S. authorities said, according to the AP.
