DTN Oil Update
Oil Up as Iran Risk Counters Venezuela's Expected Flows
SECAUCUS, N.J. (DTN) -- Oil futures rallied for a fourth consecutive day Monday as supply risks in politically embattled Iran countered an anticipated resumption of crude exports from Venezuela after the U.S. military intervention there.
NYMEX WTI for February delivery settled up $0.38, or 0.6%, at $59.50 barrel (bbl). The March ICE Brent futures contract finished up $0.53 at $63.87.
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Both WTI and Brent have about 6% since the close Wednesday, with the U.K. origin crude hitting a six-week high of $ 64.16 in the latest session.
Downstream, the front-month ULSD futures rose $0.0242 to $2.1592 gallon. Front-month RBOB followed the upward trend by adding $0.0187 to reach $1.8242 gallon.
The U.S. Dollar Index weakened by 0.265 points to 98.63 against a currency basket, providing further support to crude and other commodities denominated in the greenback.
Tehran dominated market attention following a weekend of intense civil unrest that sparked fears about its 3.2 million barrels per day (bpd) production. While the Iranian government initially claimed the situation was "under total control," late-day reports of oil workers joining the nationwide strikes reignited fears about output. Bloomberg reported traders are aggressively hedging for a potential "regime-change" scenario that led to a spike in WTI call option volumes for February and March.
While U.S. President Donald Trump suggested a willingness to negotiate, Iran's Foreign Ministry countered the nation is prepared for either armed conflict or diplomatic discussions depending on U.S. actions.
Traders also weighed the feasibility of a $100 billion investment in Venezuela's energy sector, though major oil executives expressed skepticism regarding the nation's security and high production costs.
The International Energy Agency recently cautioned the global crude surplus might surge to 3.8 million bpd this year, making any shifts in Iranian or Venezuelan volumes critical for balance.
Market participants are pivoting toward a heavy data week, starting with Tuesday's release of the Short-Term Energy Outlook from the U.S. Energy Information Administration and Wednesday's monthly market report from OPEC.
Inventory statistics for last week due from the American Petroleum Institute after 4:30 p.m. EST Tuesday and from the EIA on Wednesday will determine direction over the coming days. The EIA reported a crude draw of 3.8 million bbl for the prior week.