Oil Futures Fall on Tariffs and Ahead U.S.-Iran Talks


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil and product futures reversed Tuesday's early gains 
to settle lower as the U.S. appeared determined to stay on the path diplomacy 
in getting Iran to dismantle its nuclear program.

   Crude prices hit seven-month highs earlier the session in the wake of U.S. 
embassy evacuations in Beirut and elevated tensions in the Persian Gulf prior 
to the talks between Iran and Trump administration officials scheduled in 
Geneva on Thursday (2/26).

   Bearish pressure also mounted as the market digested the implementation of a 
10% across-the-board U.S. import tariff starting today. While lower than the 
initially proposed 15% rate, the move sparked renewed concerns over the 
long-term outlook for global energy demand.

   The U.S. Dollar Index climbed by 0.144 points to 97.785 against a basket of 
currencies, further weighing on greenback-denominated crude contracts. A 
stronger dollar typically makes oil more expensive for holders of other 
currencies, limiting buying interest during the afternoon session.

   Traders kept a cautious eye as well on shipping costs as the Baltic Dirty 
Tanker Index remains at a three-year high. Soaring charter rates for Middle 
East routes continue to reflect the underlying anxiety regarding potential 
supply chain disruptions in the region.

   On the data front, the American Petroleum Institute is scheduled to issue at 
4:30 p.m. ET its inventory report on crude, gasoline and distillates for the 
week ended February 20.  Traders will be particularly focused on whether 
gasoline stocks continue to retreat from their recent peaks above five-year 
averages. The market will have the opportunity to verify the numbers from the 
U.S. Energy Information Administration's official inventory report due on 
Wednesday (2/25).

   In other data, the Conference Board reported on Tuesday that U.S. Consumer 
Confidence rose to 91.2 in February, up from an upwardly revised reading of 89 
in January. The latest statistics beat market expectations of 87.0 and marked a 
significant rebound from the 12-year low initially reported last month, 
limiting the downside for crude prices, even as the broader energy complex 
faced technical selling pressure.

   At the close, NYMEX WTI for April delivery fell by $0.44 to $65.87 bbl, 
while the front-month ICE Brent futures contract dropped by $0.0470 to $71.02 
bbl. Downstream, RBOB futures ended the session down $0.0118 at $1.9774 gallon. 
In contrast, ULSD futures for March delivery rose by $0.0175 to $2.6957 gallon.




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