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ANS roller coaster US-Iran tensions heat crude prices -- proposed negotiations cool them
Steve Sutherlin Petroleum News
Crude prices have been on a wild ride as the market attempts to gauge the geopolitical risk of a U.S.-Iran faceoff that has sent oil higher, juxtapositioned against hopes for a peaceful resolution from proposed talks between the parties.
North Slope crude rose 67 cents Feb. 3 to close at $66.77 per barrel after six Iranian gunboats made an unsuccessful attempt to halt and board a U.S.-flagged oil tanker in the Strait of Hormuz. WTI jumped $1.07 on the day to close at $63.21 and Brent jumped $1.08 to close at $67.38.
The tanker sped up and was escorted from the area by a U.S. Navy vessel.
In a separate incident the same day, an Iranian drone was shot down after it "aggressively" approached a U.S. aircraft carrier.
Just the day before prices fell precipitously on remarks by U.S. President Donald J. Trump that Iran is negotiating seriously to end the conflict. A rising U.S. dollar added further downside for prices by making dollar-denominated crude oil more expensive for buyers that must convert other currencies for oil purchases.
ANS plummeted $3.64 Feb. 2 to close at $66.10, as WTI plunged $2.32 to close at $62.89 and Brent plummeted $4.39 to close at $66.30.
The Organization of the Petroleum Exporting Countries and its allies agreed Feb. 1 to keep oil production levels unchanged for March.
On Feb. 4 crude futures turned sharply higher on reports that U.S.-Iran talks scheduled for Feb. 6 might not happen over venue and subject matter disagreements.
WTI jumped $1.93 Feb. 4 to close at $65.14 and Brent gained $2.08 to close at $69.46.
Iran wants only to discuss its nuclear program, while the U.S. seeks a wider range of subjects including Iran's nuclear program, its ballistic missiles and its sponsorship of militia groups in the region, The Wall Street Journal reported Feb. 4.
"We'll see if we can get back to the right place," U.S. Secretary of State Marco Rubio said. "If the Iranians want to meet, we're ready."
As Petroleum News went to press Feb. 5, WTI and Brent prices were lower in Asian trade after reports that the U.S.-Iran talks were back on track for Feb. 6.
Surprise drawdown of US inventories The Feb. 4 crude price jump was supported by a surprise drawdown of U.S. reserves.
U.S. commercial crude oil inventories for the week ended Jan.30 -- excluding Strategic Petroleum Reserve supplies -- decreased by 3.5 million barrels from the previous week to 420.3 million barrels -- 4% below the five-year average for the time of year, according to U.S. Energy Information Administration data released Feb. 4.
Commercial crude stocks were expected to be unchanged according to the average estimate of nine analysts and traders in a Wall Street Journal poll.
Total motor gasoline inventories increased by 0.7 million barrels on the week to 257.9 million barrels -- 4% above the five-year average for the season, the EIA said. Distillate fuel inventories decreased by 5.6 million barrels to 127.4 million barrels -- 2% below the five-year average for the time of year.
Gasoline inventories were estimated in the Journal poll to have risen by 1.3 million barrels, while distillate fuel inventories were estimated to fall by 2.4 million barrels.
ANS fell 13 cents Jan. 30 to close at $69.74, while WTI fell 21 cents to close at $65.21 and Brent edged 2 cents lower to close at $70.69.
On Jan. 29, ANS jumped $1.94 to close at $69.87, WTI leapt $2.21 to close at $65.42 and Brent leapt $2.31 to close at $70.71.
ANS jumped $1.49 Jan. 28 to close at $68.55, as WTI rose 82 cents to close at $63.21 and Brent rose 83 cents to close at $68.40.
ANS rose 29 cents over the week from its close of $67.06 Jan. 27 to a close of $66.77 Feb. 3.
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