DTN Oil Update
Oil Futures Rise; US Warns Vessels to Avoid Iranian Waters
SECAUCUS, N.J. (DTN) -- Oil futures rallied toward the close of trade Monday, reversing early losses, as the U.S. warned commercial vessels to stay away from Iranian waters to minimize risk of detention.
Reports that U.S. forces had captured an oil tanker in the Indian Ocean after it fled quarantine in Venezuela a month ago added to geopolitical risks.
Crude to distillate prices eased in morning trade after commitments on Friday by Iran and the U.S. to continue talks over Tehran's nuclear program helped ease Middle East tensions.
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But concerns over the risk to oil supplies escalated again after the Maritime Administration in the Department of Transportation on Monday cautioned U.S.-flagged commercial vessels needing to go east of the Strait of Hormuz to avoid Iranian territorial waters as much as possible.
Iran has a documented history of conducting forced inspection and seizure of legitimate oil cargoes in the Strait of Hormuz to signal its discontent with the U.S. during periods of strained ties. Some 20 million barrels (bbl) of crude and petroleum cargoes are on the strait each day, according to U.S. Energy Information Administration.
Oil trader Vitol, in a long-term outlook, projected that global consumption of crude oil will peak at 112 million barrels per day (bpd) by the mid-2030s from a current 107 million bpd.
The profile of the barrel is expected to change too, said Vitol, which forecast more petroleum processing for plastics and aviation than road transport fuels over the next decade.
Net global consumption of gasoline is projected to drop by 1.8 million bpd by 2040, with China facing a decline of more than 50% from its current peak levels. While the United States remains the largest market for gasoline, its demand should fall by 800,000 bpd as electric vehicle adoption accelerates significantly after 2035.
Global diesel consumption is projected to fall to 19.6 million bpd by 2040, driven largely by commercial vehicles going electric in China.
At Monday's close, NYMEX WTI crude futures contract for March settled up $0.81, or 1.3%, at $64.36 bbl, after a 3% drop last week for its first weekly decline in seven weeks.
April ICE Brent futures contract edged down by $0.09, or 1.5%, to $69.04 bbl. Brent slid 4% last week for its first weekly decline since mid-December.
March ULSD climbed by $0.0036 to $ 2.4169 gallon after two straight weeks of losses.
March RBOB futures rose by $0.0323 to $1.9855 gallon, after seven consecutive weeks of rises.
The U.S. Dollar Index slid by 0.781 points to 96.725, after a two-week low of 96.71, limiting the downside in energy prices.
