DTN Oil Update
Oil Down Again After Gaza Deal, Rebuffs New Iran Sanctions
VIENNA (DTN) -- Oil prices extended their decline Friday, Oct. 10, morning on easing tensions in the Middle East and global oil glut worries.
NYMEX-traded WTI crude for November delivery slid $0.97 to $60.54 bbl, and ICE Brent for December delivery fell $1.01 to $64.21 bbl.
Among oil products, November RBOB gasoline futures declined $0.0215 to $1.8611 gallon, and front-month ULSD futures slumped $0.0245 to $2.2558 gallon.
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The across-the-board drop on NYMEX came despite the U.S. dollar backing down from the July highs hit in the previous session -- a development typically favorable to commodities denominated in the U.S. currency. The U.S. Dollar Index softened 0.230 points to 99.055 against a basket of foreign currencies.
Oil prices have mostly been on a persistent downtrend since April as global supply growth looked to outpace the rise in demand.
Demand concerns have been exacerbated by a new U.S. trade policy of high tariffs, even as prices remained encouraging enough to incentivize production growth.
Adding to bearish sentiment has been OPEC+'s abandonment of the fight to lift crude prices via production cuts, as the producer group opened the spigots instead, adding to oversupply risks.
While market fundamentals overwhelmingly led to bearish pressure, geopolitical supply risks had minimized some of the downside.
But with the Mideast wars and sanctions on Russian and Iranian crude oil exports proving to have little effect in curbing global supply, the geopolitics-associated risk premium became smaller and price spikes related to conflicts became more short-lived.
New U.S. sanctions on more than 50 entities involved in Iranian oil trade, announced Thursday, Oct. 9, had little effect on prices.
The Gaza ceasefire deal, also signed Thursday, further eroded the risk premium and forced traders' attention back to bearish fundamentals.
The peace deal could put an end to Houthi attacks on commercial shipping lanes connecting to the Suez Canal, which have led to rerouted trade, longer voyage times and higher costs.
The pact also lowers the risks to both Iranian supplies and regional flows passing through Iran-controlled waters.