Oil Slumps after Trump Eases Fears of U.S. Strike on Iran


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures tumbled Thursday (1/15) morning on U.S. 
President Donald Trump's apparent wind down of threats to launch imminent 
strikes on Iran. An expansion of U.S. crude stocks, alongside an outsized build 
in gasoline inventories, added to bearish pressure.

   NYMEX WTI for February delivery fell $2.70, or 4.4%, to $59.32 bbl. ICE 
Brent for March delivery plummeted $2.81, or 4.2%, to $63.78 bbl.

   Downstream, NYMEX ULSD futures for February delivery slid $0.0815 to $2.2004 
gallon, and front-month RBOB futures tumbled $0.0636 to $1.7969 gallon.

   The U.S. Dollar Index was little changed, up 0.273 points to 99.18 against a 
basket of foreign currencies.

   After a 9% rally over five straight sessions, energy prices reversed course 
following Wednesday's (1/14) settlement after Trump told reporters that he had 
been informed that the "killing in Iran is stopping" and there were "no plan 
for executions" by the Islamic republic.

   Prior to that, large scale anti-government protests had sent geopolitical 
risks spiking in Iran, raising questions about the security of oil supplies 
from OPEC's fourth largest producer with an output of 3.2 million bpd. The 
violent government crackdown on the demonstrations that lasted more than two 
weeks had left thousands dead, according to human rights groups. Trump had 
added to the tensions by calling for the protests to continue and threatened 
the regime in Tehran with airstrikes if it killed more people.

   Oil markets risks were also turned down by reports that Venezuela had begun 
to restart some of its crude production forcibly shut by an U.S. embargo. 
According to secondary sources polled by OPEC, Venezuelan output in December 
tumbled below the 900,000-bpd mark for the first time since May.

   In the U.S., gasoline inventories continued to expand at a rapid pace, U.S. 
Energy Information Administration data revealed Wednesday. Total gasoline 
stocks added 9 million bbl in the week ending January 9, and commercial crude 
oil inventories grew by 3.4 million bbl, propelling stocks 3.1% and 2.4% above 
year-ago levels, respectively.




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