DTN Oil Update
Oil Prices Mixed on U.S. Sanctions Waivers, Hormuz Threats
SECAUCUS, NJ (DTN) -- Oil futures ended mixed Monday, with West Texas Intermediate (WTI) rallying over 2% while international benchmark ICE Brent edged lower, as a U.S. sanctions waiver on Russian energy weighed on waterborne crude while severe Strait of Hormuz supply disruptions drove buyers to domestic barrels.
NYMEX WTI crude for November delivery rose $2.25, or 2.22%, to settle at $103.66 per barrel(bbl), after rising to $104.18 during the session.
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ICE Brent for December delivery closed down $0.031, or 0.3%, at $109.55 bbl. The session high was $110.70.
Downstream, NYMEX ULSD for November delivery climbed $0.0210, or 0.43%, to finish at $4.8519 gallon. It peaked at $4.9733 for the day.
Reformulated Blendstock for Oxygenate Blending (RBOB) for November retreated $0.0440, or 1.36%, to end the session at $3.1914 gallon. It hit an intraday high of $3.2442.
By 2:39 p.m. EDT, the U.S. dollar index gained 0.132 points to 101.790 against a basket of currencies.
Pressure on seaborne crude benchmarks mounted after Washington issued a 60-day general license suspending new sanctions and tariffs on Russian energy exports. The Treasury Department action follows an agreement announced by President Donald Trump to allow Russian diesel into global markets in order to curb retail fuel prices ahead of next month's elections.
The influx of potential waterborne supply weighed heavily on Brent, triggering profit-taking off recent multi-month highs. Market analysts, however, noted that the physical impact of the waiver may be limited due to extensive damage inflicted on Russian refining capacity by recent Ukrainian drone strikes.
Conversely, domestic crude caught a strong bid as compounding security threats in the Persian Gulf forced refiners to seek alternative supplies. Over the weekend, an oil tanker exploded after striking a sea mine in the Strait of Hormuz, underscoring ongoing risks along the vital maritime chokepoint. Vessel tracking data showed daily Persian Gulf crude exports dropping to 8.5 million barrels per day (bpd) last week--less than half their typical volume prior to the recent escalation.
Domestic physical balances were further tightened by ongoing Gulf of Mexico production shut-ins caused by Hurricane Isaias and low U.S. commercial crude inventories, which remain roughly 3% below their five-year average.
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