DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices extended their decline Tuesday morning as futures continued to shed part of the risk premium tied to fears of a post-election reescalation in the U.S.-Iran war. Recent dovish comments from Washington, a reported diplomatic breakthrough with Tehran and the revival of U.S.-brokered talks between Russia and Ukraine all helped cool supply woes.

By 9:00 a.m. EST, ICE Brent for January delivery was down $2.90 to trade near $89.67 bbl, and NYMEX WTI for December delivery fell $2.30 to $84.55 bbl.

Downstream, NYMEX ULSD for December delivery slumped $0.1920 to $4.0228 gallon, and front-month RBOB futures retreated $0.0626 to $2.5883 gallon.

The U.S. Dollar Index strengthened by 0.35 points to 101.885 against a basket of foreign currencies.

Following Monday's meeting with Qatari mediators at the White House, U.S. President Trump said that he deemed military action against Iran as "not very necessary." Reports late Monday suggested that Washington was open to Tehran's latest peace proposal, which would see the immediate reopening of the Strait of Hormuz and the lifting of the U.S. embargo on Iran. The deal would allegedly allow for limited Uranium enrichment within the country, a significant U.S. concession and departure from a previously held "red line."

Elsewhere, the United Arab Emirates on Tuesday hosted the first U.S.-brokered talks between Russia and Ukraine since February. An end to the four-and-a-half year long conflict could bring respite to an undersupplied market, particularly in light of the last six months of intensifying Ukrainian attacks on Russia's refining sector, which have exacerbated the global diesel supply crunch caused by the U.S. war on Iran. U.S. officials after the meeting, while touting progress, cautioned that the talks were just entering their exploratory phase, suggesting that a peace deal was currently far from imminent.

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