Oil Steady as Disruptions Deepen Ahead of Iran Peace Talks


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures edged higher Thursday (4/16) morning as flows 
through the Strait of Hormuz remained at a trickle ahead of possible 
U.S.-Iranian peace talks later this week.

   A U.S. blockade of Iranian maritime trade in place since Monday deepened the 
oil supply disruption from the Middle East. Despite this, prices have softened 
this week as both Tehran and Washington D.C. signaled interest in holding peace 
talks before the current ceasefire expires on April 21. A second round of 
direct negotiations is expected to be held in Islamabad at the end of this or 
early next week.

   Near 08:00 am ET, WTI for May delivery was up $0.13 to trade near $91.42 
bbl, and Brent for June delivery rose $0.75 to $95.68 bbl.

   ULSD futures for May delivery advanced $0.0582 to $3.8114, and front-month 
RBOB futures inched up $0.0084 to $3.0776 gallon.

   The US dollar index strengthened by 0.12 points to 97.97 against a basket of 
foreign currencies.

   Iran has selectively allowed tanker movements since the outbreak of the war 
almost seven weeks ago. In response to the U.S. naval blockade of Iranian 
ports, Tehran said it was considering shutting traffic for all parties, which 
would add to the current supply disruption. The U.S. Treasury, meanwhile, plans 
to let expire the temporary sanctions waivers granted on Russian and Iranian 
oil.

   An International Energy Agency report released earlier this week forecast 
widespread demand destruction brought upon by high prices and supply shortages. 
That has added to this week's bearish sentiment, fueled by Pakistan's efforts 
to mediate the conflict.

   While futures and equity markets are seemingly betting on an imminent 
diplomatic resolution to the U.S.-Israeli war in Iran, physical supply of oil 
and products remains severely restricted, and will likely take months to be 
restored to pre-war levels.

   A bullish government oil inventory report, meanwhile, lent some price 
support. The U.S. Energy Information Administration on Wednesday reported 
across-the-board draws to domestic commercial crude oil and fuel inventories 
amid a surge in exports of both crude and refined products. Total U.S. 
petroleum exports soared to a record high 12.74 million bpd in the week ending 
April 10, EIA data showed.




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