DTN Oil Update
Oil Futures Fall on Tariffs and Ahead US-Iran Meeting
SECAUCUS, N.J. (DTN) -- Oil and product futures reversed Tuesday's early gains to settle lower as the U.S. appeared determined to stay on the path diplomacy in getting Iran to dismantle its nuclear program.
Crude prices hit seven-month highs earlier the session in the wake of U.S. embassy evacuations in Beirut and elevated tensions in the Persian Gulf prior to the talks between Iran and Trump administration officials scheduled in Geneva on Thursday, Feb. 26.
Bearish pressure also mounted as the market digested the implementation of a 10% across-the-board U.S. import tariff starting today. While lower than the initially proposed 15% rate, the move sparked renewed concerns over the long-term outlook for global energy demand.
The U.S. Dollar Index climbed by 0.144 points to 97.785 against a basket of currencies, further weighing on greenback-denominated crude contracts. A stronger dollar typically makes oil more expensive for holders of other currencies, limiting buying interest during the afternoon session.
Traders kept a cautious eye as well on shipping costs as the Baltic Dirty Tanker Index remains at a three-year high. Soaring charter rates for Middle East routes continue to reflect the underlying anxiety regarding potential supply chain disruptions in the region.
On the data front, the American Petroleum Institute is scheduled to issue at 4:30 p.m. EST its inventory report on crude, gasoline and distillates for the week ended Feb. 20. Traders will be particularly focused on whether gasoline stocks continue to retreat from their recent peaks above five-year averages. The market will have the opportunity to verify the numbers from the U.S. Energy Information Administration's official inventory report due on Wednesday, Feb. 25.
In other data, the Conference Board reported on Tuesday that U.S. Consumer Confidence rose to 91.2 in February, up from an upwardly revised reading of 89 in January. The latest statistics beat market expectations of 87.0 and marked a significant rebound from the 12-year low initially reported last month, limiting the downside for crude prices, even as the broader energy complex faced technical selling pressure.
At the close, NYMEX WTI for April delivery fell by $0.44 to $65.87 bbl, while the front-month ICE Brent futures contract dropped by $0.0470 to $71.02 bbl. Downstream, RBOB futures ended the session down $0.0118 at $1.9774 gallon. In contrast, ULSD futures for March delivery rose by $0.0175 to $2.6957 gallon.
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