Oil Dips From 6-Mo High on Iran Tensions Pause


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures hit six-month highs Monday (2/23) before 
settling lower as the U.S. committed to another round of talks with Iran in 
what remains a volatile situation for the Middle East.

   The two sides are to meet again Thursday (2/26) over the U.S. agenda to 
dismantle Iran's nuclear program.  U.S. President Donald Trump said last week 
Tehran had 10 to 15 days to reach a deal with negotiators appointed by the 
White House or face consequences from the largest military presence that 
Washington has built in the Persian Gulf in two decades.

   Iran is demanding a full lifting of U.S. sanctions on its oil and has so far 
rejected U.S. demands for "zero enrichment" of its nuclear fuel.

   Notwithstanding Monday's decline, crude prices remain up 17% on the year as 
traders bet heavily call options amid market volatility at its highest since 
June as the scenario of a potential U.S. attack on Iran alternates with the 
possibility of de-escalation.

   "Iran, though sanctioned, still pumps around 3.3 million bpd, and if exports 
get cut off, we're talking major supply squeezes that could yank millions of 
barrels off the market," Phil Flynn, energy analyst at the Price Futures Group 
in Chicago, wrote in a commentary.

   Declines in U.S. crude, gasoline and distillate balances reported by the 
Energy Information Administration last week also limited the market's downside. 
Commercial crude stocks fell by 9.0 million bbl during the week ended February 
13, while gasoline retreated by 3.3 million bbl and distillates 4.6 million, 
the agency said.

   At Monday's close, NYMEX WTI crude futures for March delivery settled down 
$0.17 at $66.31 bbl after reaching a six-month peak of $67.28. ICE Brent crude 
for April delivery finished lower by $0.27 at $71.49 bbl, after reaching its 
highest since July at $72.04.

   Among refined products, RBOB futures for March were down $0.0078 to $1.9895. 
ULSD bucked the negative trend as front-month futures rose $0.0926 to $2.6784 
gallon.

   The U.S. dollar index eased 0.134 points to 97.595 against a basket of 
foreign currencies, limiting the decline in dollar-denominated energy prices.




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