DTN Oil Update
Oil Dips From 6-Month High on Iran Tensions Pause
SECAUCUS, N.J. (DTN) -- Oil futures hit six-month highs Monday before settling lower as the U.S. committed to another round of talks with Iran in what remains a volatile situation for the Middle East.
The two sides are to meet again Thursday, Feb. 26, over the U.S. agenda to dismantle Iran's nuclear program. U.S. President Donald Trump said last week Tehran had 10 to 15 days to reach a deal with negotiators appointed by the White House or face consequences from the largest military presence that Washington has built in the Persian Gulf in two decades.
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Iran is demanding a full lifting of U.S. sanctions on its oil and has so far rejected U.S. demands for "zero enrichment" of its nuclear fuel.
Notwithstanding Monday's decline, crude prices remain up 17% on the year as traders bet heavily call options amid market volatility at its highest since June as the scenario of a potential U.S. attack on Iran alternates with the possibility of de-escalation.
"Iran, though sanctioned, still pumps around 3.3 million bpd, and if exports get cut off, we're talking major supply squeezes that could yank millions of barrels off the market," Phil Flynn, energy analyst at the Price Futures Group in Chicago, wrote in a commentary.
Declines in U.S. crude, gasoline and distillate balances reported by the Energy Information Administration last week also limited the market's downside. Commercial crude stocks fell by 9.0 million bbl during the week ended Feb. 13, while gasoline retreated by 3.3 million bbl and distillates 4.6 million, the agency said.
At Monday's close, NYMEX WTI crude futures for March delivery settled down $0.17 at $66.31 bbl after reaching a six-month peak of $67.28. ICE Brent crude for April delivery finished lower by $0.27 at $71.49 bbl, after reaching its highest since July at $72.04.
Among refined products, RBOB futures for March were down $0.0078 to $1.9895. ULSD bucked the negative trend as front-month futures rose $0.0926 to $2.6784 gallon.
The U.S. Dollar Index eased 0.134 points to 97.595 against a basket of foreign currencies, limiting the decline in dollar-denominated energy prices.