Brent Near $110 as Iran Gas Hub Hit, U.S. Waives Jones Act


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude and refined product markets mostly settled 
higher on Wednesday (3/18), with Brent nearly hitting $110 bbl, as Iran pledged 
to strike additional Middle East energy infrastructure in retaliation to 
U.S.-Israeli attacks at its South Pars gas hub.

   But even as energy prices rose for the 11th time in 13 sessions, several 
factors moderated the rally on NYMEX.

   The first was a 60-day waiver on the Jones Act, signed by U.S. President 
Donald Trump on Wednesday. The move permits the transport of energy and 
agricultural products between U.S. ports by international tankers -- a practice 
previously forbidden since 1920.

   The White House relaxed the legislation to reduce the congestion and cost 
for moving oil and other products around the United States. Global shipping 
rates have soared and vessel availability has shrunk from Iran's blockade of 
the Strait of Hormuz, which used to be the artery for a fifth of the world's 
petroleum cargoes.

   In another action, the Federal Reserve left U.S. interest rates unchanged in 
a 3.5-3.75% range as it noted higher inflationary pressures from a 40% spike in 
oil prices caused by the widening Middle East conflict. A cut in rates would 
have spurred most markets, including oil, higher.

   Despite the worldwide tightness in supply, continued builds in U.S. crude 
stocks, as reported by the Energy Information Administration (EIA) on 
Wednesday, limited the upside in WTI futures versus Brent, the global crude 
benchmark. The EIA said domestic crude inventories climbed by 6.2 million bbl 
during the week ended March 13 to reach a near two-year high of 449.3 million.

   At the close, ICE Brent crude for May delivery settled up $3.96 at $107.38 
bbl, after a session high at $109.95 bbl. NYMEX WTI crude for April finished up 
just 11 cents at $96.32 bbl.

   Brent's outsized gain came after reports that Iran had suspended most 
operations on its South Pars gas field to contain damage resulting from 
U.S.-Israeli missile strikes, which also hit an oil processing plant and a 
refinery. Following the attacks, Tehran released a list of regional energy 
facilities that it said would be potential targets for reprisal.

   Among refined products, NYMEX ULSD futures for April delivery settled up 
$0.1820 at $4.1978 gallon, underscoring the continued surge in global diesel 
prices.

   The EIA added to the upside by reporting that U.S. distillate fuel oil 
inventories fell by 2.5 million bbl to 116.9 million bbl last week.

   On the gasoline front, the RBOB gasoline contract for April, however, fell 
by $0.0249 to close at $3.0985 gallon. This was despite the EIA citing a 5.5 
million bbl drop in U.S. gasoline stocks to 244 million bbl.

   The U.S. dollar index strengthened by 0.245 points to 99.575 against a 
basket of foreign currencies, further moderating the rally on NYMEX.




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