DTN Oil Update
Oil Jumps 5% as Hormuz Uncertainty Grows
DAVENPORT, Fla. (DTN) -- Crude futures jumped about 5% Monday as uncertainty increased over whether the United States and Iran will reach a deal to increase shipping traffic through the Strait of Hormuz, reversing some of last week's steep losses.
NYMEX WTI crude for September delivery settled up $3.95, or 5.1%, at $82.13 bbl, rebounding after the U.S. crude benchmark fell 9% last week for a second consecutive weekly loss.
WTI's intramonth spread remained in strong backwardation despite falling $0.020 on the session to $1.010 bbl. The spread has traded around $1 bbl or higher since July 22, signaling continued strength in prompt crude supplies relative to later-dated barrels.
ICE Brent crude for October finished the session up $4.37, or 5.2%, at $87.72 bbl, following a 9% decline last week.
Among refined products, NYMEX ULSD for September delivery surged $0.2874, or 7.4%, to settle at $4.1898 gallon after the diesel futures contract fell 5% last week.
NYMEX RBOB for September climbed $0.1501, or 5%, to finish at $3.1354 gallon, recovering some of the previous week's roughly 4% decline.
Monday's rally came as uncertainty increased over prospects for an agreement between Washington and Tehran that would allow more vessels to transit the Strait of Hormuz, the key waterway that in normal times handles around 20 million bpd of global energy liquids.
Expectations for an agreement had pressured crude prices over the previous two weeks, with traders anticipating that a deal could restore more normal shipping through the waterway. Those expectations weakened Monday as uncertainty surrounding negotiations increased, returning a geopolitical risk premium to crude and refined product markets.
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