Oil Down Again After Gaza Deal, Rebuffs New Iran Sanctions


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil prices extended their decline Friday (10/10) morning on 
easing tensions in the Middle East and global oil glut worries.

   NYMEX-traded WTI crude for November delivery slid $0.97 to $60.54 bbl, and 
ICE Brent for December delivery fell $1.01 to $64.21 bbl.

   Among oil products, November RBOB gasoline futures declined $0.0215 to 
$1.8611 gallon, and front-month ULSD futures slumped $0.0245 to $2.2558 gallon.

   The across-the-board drop on NYMEX came despite the U.S. dollar backing down 
from the July highs hit in the previous session -- a development typically 
favorable to commodities denominated in the U.S. currency.  The Dollar Index 
softened 0.230 points to 99.055 against a basket of foreign currencies.

   Oil prices have mostly been on a persistent downtrend since April as global 
supply growth looked to outpace the rise in demand.

   Demand concerns have been exacerbated by a new U.S. trade policy of high 
tariffs, even as prices remained encouraging enough to incentivize production 
growth.

   Adding to bearish sentiment has been OPEC+'s abandonment of the fight to 
lift crude prices via production cuts, as the producer group opened the spigots 
instead, adding to oversupply risks.

   While market fundamentals overwhelmingly led to bearish pressure, 
geopolitical supply risks had minimized some of the downside.

   But with the Mideast wars and sanctions on Russian and Iranian crude oil 
exports proving to have little effect in curbing global supply, the 
geopolitics-associated risk premium became smaller and price spikes related to 
conflicts became more short-lived.

   New U.S. sanctions on more than 50 entities involved in Iranian oil trade, 
announced Thursday (10/9), had little effect on prices.

   The Gaza ceasefire deal, also signed Thursday, further eroded the risk 
premium and forced traders' attention back to bearish fundamentals.

   The peace deal could put an end to Houthi attacks on commercial shipping 
lanes connecting to the Suez Canal, which have led to rerouted trade, longer 
voyage times and higher costs.

   The pact also lowers the risks to both Iranian supplies and regional flows 
passing through Iran-controlled waters.




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