DTN Oil Update
Oil Steady as Iran Tensions Ease, OPEC Sticks to Target
VIENNA (DTN) -- Oil and product futures edged higher Tuesday, Feb. 3, morning, after dropping more than 4% in the previous session as a portion of the geopolitical risk premium tied to U.S.-Iran tensions faded after both sides announced talks.
OPEC on Monday, meanwhile, revealed that Iraq, Kazakhstan, Oman and the UAE agreed to lower voluntary production cuts to compensate for past overproduction in the months ahead. On Sunday, eight OPEC+ countries reaffirmed plans to extend the pause in production hikes to March.
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The OPEC commitment, along with U.S. President Donald Trump's announcement of a trade deal with India, supported oil prices.
NYMEX traded WTI futures for March delivery rose $0.41 to $62.55 bbl, and ICE Brent for April delivery advanced $0.31 to $66.61 bbl.
Downstream, front-month ULSD futures added $0.0334 to trade near $2.3932 gallon, and RBOB for March delivery gained $0.0193 to $1.8707 gallon.
The U.S. Dollar Index remained little changed, softening by 0.102 points to 97.545 against a basket of foreign currencies.
U.S. and Iranian diplomats are to resume in Turkey on Friday nuclear talks last held in June. Some of the military escalation risk remained priced-in, as U.S. President Donald Trump on Monday reiterated his willingness to strike Iran should negotiations fail and U.S. warships remained in the region.
Trump also announced on Monday that the U.S. tariffs on Indian imports would drop to 18% from a prior 25%, following his phone call with Prime Minister Narendra Modi of India. The U.S. president said an additional 25% tariff imposed on India for its purchases of Russian oil would also be revoked, with New Delhi's agreement to buy U.S.-owned or marketed oil.
Modi separately confirmed the new tariff rate of 18% but did not comment on the future of Indian oil purchases from Russia. The U.S.-India deal announcement came less than a week after the European Union announced a free trade agreement with India, which aims to double EU goods exports to the fastest growing large economy by 2032 and reduces tariffs by more than 96%.
OPEC's commitment to stick to its production targets reinforced its desire for a balanced crude market, supported by OECD inventories that trail long term averages.
On the U.S. inventory front, the American Petroleum Institute is set to release its weekly U.S. inventory estimate later on Tuesday, followed by official data from the Energy Information Administration Wednesday.