DTN Oil Update
Oil Steady as Disruptions Deepen Ahead of Iran Peace Talks
VIENNA (DTN) -- Oil futures edged higher Thursday morning as flows through the Strait of Hormuz remained at a trickle ahead of possible U.S.-Iranian peace talks later this week.
A U.S. blockade of Iranian maritime trade in place since Monday deepened the oil supply disruption from the Middle East. Despite this, prices have softened this week as both Tehran and Washington D.C. signaled interest in holding peace talks before the current ceasefire expires on April 21. A second round of direct negotiations is expected to be held in Islamabad at the end of this or early next week.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Near 8:00 a.m. EDT, WTI for May delivery was up $0.13 to trade near $91.42 bbl, and Brent for June delivery rose $0.75 to $95.68 bbl.
ULSD futures for May delivery advanced $0.0582 to $3.8114, and front-month RBOB futures inched up $0.0084 to $3.0776 gallon.
The U.S. Dollar Index strengthened by 0.12 points to 97.97 against a basket of foreign currencies.
Iran has selectively allowed tanker movements since the outbreak of the war almost seven weeks ago. In response to the U.S. naval blockade of Iranian ports, Tehran said it was considering shutting traffic for all parties, which would add to the current supply disruption. The U.S. Treasury, meanwhile, plans to let expire the temporary sanctions waivers granted on Russian and Iranian oil.
An International Energy Agency report released earlier this week forecast widespread demand destruction brought upon by high prices and supply shortages. That has added to this week's bearish sentiment, fueled by Pakistan's efforts to mediate the conflict.
While futures and equity markets are seemingly betting on an imminent diplomatic resolution to the U.S.-Israeli war in Iran, physical supply of oil and products remains severely restricted, and will likely take months to be restored to pre-war levels.
A bullish government oil inventory report, meanwhile, lent some price support. The U.S. Energy Information Administration on Wednesday reported across-the-board draws to domestic commercial crude oil and fuel inventories amid a surge in exports of both crude and refined products. Total U.S. petroleum exports soared to a record high 12.74 million bpd in the week ending April 10, EIA data showed.