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PREVIEW: Oil Futures Advance as Iran Accord Deadline Nears
4/24 7:40 AM
PREVIEW: Oil Futures Advance as Iran Accord Deadline Nears CRANBURY, N.J. (DTN) -- Nearest delivered oil futures traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange edged higher in early trading following Monday's advance to fresh settlement highs, as geopolitical concerns join supportive fundamentals in boosting values. The quickly approaching May 12 deadline set by U.S. President Donald Trump for major changes to be made to the 2015 Iranian nuclear accord is supporting higher oil prices, especially Brent which widened its premium to West Texas Intermediate to $6.07 bbl at Monday's settlement---the widest the spread has been since the opening trading days of 2018. Trump has demanded three changes to the agreement regarding inspections at Iranian nuclear facilities, Iran's ballistic missile program, and the timeline that allows Tehran to resume its nuclear program. Absent these changes Trump said he would withdraw the United States from the agreement, which would re-impose sanctions on Iran that analysts estimate could cut Iranian crude exports by 350,000 bpd. French President Emmanuel Macron is meeting with Trump today, with expectations Macron will urge Trump not to withdraw from the accord. Macron is also expected to discuss the Syrian civil war. Earlier this month, U.S., French and British forces launched a missile strike against Syrian chemical weapons facilities in response to Syria's use of chemical weapons on a rebel enclave near Damascus. Iran and Russia are allied with the Syrian regime. Trump will also meet with German Chancellor Angela Merkel on Friday, with Merkel also expected to try and persuade Trump to maintain U.S. participation with the accord. The Yemen conflict is also underpinning higher crude values this week, with Saudi Arabia on Monday reporting that 19 oil tankers were being held by Houthi rebels near the port of Hodeidah, notes Naples, Fla.-based PFI. Saudi Arabia is leading a coalition in Yemen to oust the Houthis, which have support from Iran. Tehran denies involvement in the conflict. On Monday, there were reports that a Saudi airstrike in Yemen killed the political leader of the Houthis. PFI also notes an attack on the Waha oil field in Libya over the weekend that is seen cutting production by 80,000 bpd until repairs are completed, which are seen taking a few days. Libya, a member of the Organization of the Petroleum Exporting Countries, averaged 968,000 bpd of crude production in March, a three-month low. Overnight, NYMEX ULSD and ICE Brent crude traded at fresh multiyear highs on their spot continuous chart, with the NYMEX RBOB contract holding just below Monday's $2.1367 gallon nearly eight-month spot high. WTI futures are nearing last week's $69.56 bbl better-than three-year spot high, while the U.S. dollar softens after trading at a fresh nearly eight-week high overnight. Futures at 8:00 AM ET NYMEX Contract Last Change High Low WTI June $68.85 $0.21 $69.33 $68.70 WTI July $68.59 $0.22 $69.11 $68.53 ULSD May $2.1413 $0.0004 $2.1522 $2.1390 ULSD June $2.1336 $0.0033 $2.1432 $2.1306 RBOB May $2.1249 $0.0050 $2.1354 $2.1227 RBOB June $2.1265 $0.0035 $2.1379 $2.1251 ICE Brent June $74.81 $0.10 $75.27 $74.65 Brent July $74.08 $0.07 $74.55 $73.91 SPOT PRODUCT MARKETS Spot market oil product prices in U.S. cash markets opened the new trading week higher fueled by a late session futures upside surge. San Francisco CARBOB rallied over 4.0cts rated at a 13.5cts June futures premium and climbed 2.08cts in Los Angeles, priced 15.5cts over the June MERC. Portland suboctane regular maintained a 17.0cts May futures premium that fueled a 2.78cts spot price advance. Gulf Coast 7.8-lb. RBOB improved 75pts in basis and 3.53cts in flat price to $2.0962 gallon, and matched the futures bounce in New York Harbor for 9.0-lb. quality RBOB. Chicago and Group 3 9.0-lb. CBOB values each ramped up 50pts in cash differential and 3.53cts in spot prices. Prompt ULSD in Portland gained 150pts in basis and 3.29cts in spot price rated at a 17.0cts May futures premium at $2.3459 gallon. CARB ULSD in the Bay rode the 1.72cts June futures advance higher rated at a 6.0cts MERC premium, and eased a penny in cash differential in the basin the limited spot price to a 0.72cts session gain. Open market ULSD in Chicago ramped up 2.16cts on a prompt deal closed 3.5cts below the May futures print, and by 2.44cts in Group 3 trading at a 1.35cts MERC discount. Gulf Coast 62-grade diesel sold at a 4.3cts June futures discount that boosted spot price by 1.54cts, and edged 1.29cts higher in the Harbor versus a 0.25cts MERC premium. NEW YORK HARBOR GULF COAST Heating Oil $2.0735 Heating Oil $1.9648 ULS Heating Oil $2.1110 ULS Heating Oil $2.0605 ULSD $2.1460 ULSD $2.1005 Jet, 54-grade $2.1910 Jet, 54-grade $2.0786 Conventional Regular $2.1014 Conventional Regular $2.0624 RBOB $2.1149 Conventional Premium $2.2099 PBOB $2.2474 RBOB $2.0974 CBOB Regular $2.0349 PBOB $2.2349 CBOB Premium $2.2149 CBOB Regular $2.0524 CBOB Regular 7.8 $2.0749 CBOB Premium $2.2349 CBOB Premium 7.8 $2.2524 A2 CBOB $1.9999 D2 CBOB $2.1824 GROUP 3 ULSD $2.1300 Jet $2.1060 CHICAGO Suboctane Gasoline $2.0049 ULSD $2.1085 Conventional Premium $2.2099 Jet $2.1335 CBOB Regular $2.0499 LOS ANGELES Conventional Premium $2.3149 ULSD $2.2086 RBOB $2.1599 CARB ULSD $2.2086 PBOB $2.3499 Jet $2.1711 Conventional Regular $2.2715 Conventional Premium $2.4315 PORTLAND CARBOB Regular $2.2815 ULSD $2.3485 CARBOB Premium $2.4315 Jet $2.2110 Suboctane Gasoline $2.2949 SAN FRANCISCO Conventional Premium $2.6499 ULSD $2.2035 CARB ULSD $2.2035 Jet $2.1810 Conventional Regular $2.2315 Conventional Premium $2.5215 CARBOB Regular $2.2615 CARBOB Premium $2.5215 Brian L. Milne, 1.609.371.3328, brian.milne@dtn.com, www.dtn.com. (c) 2018 DTN. All rights reserved.