DTN Oil Update
WTI at $97 After Choppy Trade on Mideast Peace Prospects
SECAUCUS, N.J. (DTN) -- Oil markets saw choppy trade Thursday on conflicting signals over peace prospects in the Middle East as Israel delivered mixed messaging on whether it would accede to Iran's demands to stop bombing Lebanon.
U.S. President Donald Trump told a televised interview that Israel was scaling back its military operations in Lebanon. He said this was to maintain the ceasefire with Iran that the United States and Israel had agreed to on Tuesday, after 40 days of fighting.
"Netanyahu told me he'd low-key it," Trump said during an appearance on the NBC network, referring to Israeli Prime Benjamin Netanyahu's apparent willingness to scale back on Israeli attacks on Lebanon.
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But Netanyahu himself told Israeli media that his forces were "continuing to strike Hezbollah with force" to secure Israel's northern territory which borders Lebanon.
Other news outlets cited Israeli Defense Forces as saying they were bracing for Lebanese counterstrikes and, as such, did not want to let up on their bombing of Lebanon.
Meanwhile, the Strait of Hormuz remained essentially closed, defying President Trump's demand for unrestrained passage on the waterway. As the Middle East's oil artery, the strait used to see crossings by as many as 140 vessels a day, carrying a total of some 20 million bpd of petroleum liquids, aside from other commodities. Tehran's effective blockade of the Hormuz shortly after the start of U.S.-Israeli airstrikes on February 27 has reduced traffic there to a trickle.
On Thursday, only three crossings were reported on the strait, comprising of one vessel carrying dry goods and two Iranian-flagged tankers, one carrying bunker fuel and another fuel. That was after five ships that transited on Wednesday, all of them non-oil carriers. More than 800 ships were, meanwhile, reported stranded in the adjacent Persian Gulf.
Iran has announced alternative routes for maritime traffic in the Persian Gulf, citing the risk of sea mines on the Hormuz. It is also demanding a toll of $1 for every barrel (bbl) carried through the strait, adding further complications to Middle East oil transit and peace talks.
Transit on the Hormuz, an international waterway, is "not a privilege to be granted, withheld or weaponized," UAE Minister of Industry Sultan Ahmed Al Jaber, who's also the CEO at Abu Dhabi National Oil Co, said in published remarks on Thursday.
NYMEX WTI for May delivery settled up $3.46, or 3.7%, at $97.87 bbl after a session high of $102.70. It fell 16% on Wednesday, reacting to the ceasefire enforced the prior day.
ICE Brent for June closed up $1.17, or 1.2%, at $95.92 bbl, after a session peak at $ 99.50. The front-month Brent contract fell 13% on Wednesday.
Downstream, RBOB futures for May delivery softened by $0.0052 to $3.0007 gallon, after trading as high as $3.1151 earlier. Front-month ULSD futures climbed by $0.1286 to $3.9370 gallon, after a session peak at $ 4.0989.
The U.S. Dollar Index fell by 0.325 points to 98.600 against a basket of foreign currencies by 2:55 p.m. EDT.