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Iran, US storms lift ANS
Iranian situation heats up as 'massive armada' heads to Middle East
Steve Sutherlin Petroleum News
Alaska North Slope crude leapt $1.60 Jan. 27 to close at $67.06 per barrel on heightened tensions swirling around Iran as the Mideast nation contends with domestic unrest and attention from Washington, D.C. West Texas intermediate soared $1.76 to close at $62.39 and Brent rocketed $1.98 to closed at $67.57.
Brutish U.S. weather also supported crude's rise by spiking demand for heating fuels and disrupting oil production. Crude was also boosted by a drawdown of U.S. commercial reserves.
Crude futures continued higher Jan. 28, taking WTI up 82 cents to close at $63.22 and lifting Brent 83 cents to a close of $68.40. The Jan. 28 ANS closing price was unavailable as Petroleum News went to press Jan. 29.
On Jan. 27, ANS closed at a $4.67 premium to WTI and at a 51-cent discount to Brent.
President Donald Trump said Jan. 28 that the United States had dispatched a "massive armada" to Iran, adding that the USS Abraham Lincoln and its strike group were deploying to hasten an agreement with the Iranian regime.
"Hopefully Iran will quickly 'Come to the Table' and negotiate a fair and equitable deal -- NO NUCLEAR WEAPONS -- one that is good for all parties," Trump wrote on Truth Social. "Time is running out, it is truly of the essence!"
"The advance of U.S. military equipment toward Iran has pumped in at least $1-$1.50 of geo-risk into the crude futures while lack of progress regarding a cease-fire or peace agreement between Ukraine and Russia continues to offer background support," Ritterbusch and Associates said in a note reported by the Wall Street Journal.
The company said that the loss of U.S. production -- and disruption at refineries -- due to weather which appears more extensive than expected -- added to short-covering.
Bullish US crude drawdown U.S. crude oil inventories fell, according to data released Jan. 28 by the U.S. Energy Information Administration.
Commercial crude oil inventories for the week ended Jan. 23 fell 2.3 million barrels to 423.8 million barrels -- 3% below the five-year average for the time of year, the EIA said.
The drawdown was a surprise. Crude inventories had been expected to have risen by 1 million barrels, according to a Wall Street Journal analyst survey.
U.S. motor gasoline inventories rose by 223,000 barrels to 257.2 million barrels -- 5% above the five-year average, the EIA said.
The Journal poll called for gasoline stocks to be up by 1 million barrels.
Distillate fuel inventories rose by 329,000 barrels to 132.9 million barrels -- 1% above the five-year average.
Analysts expected a 1.4-million-barrel drawdown in distillate inventories, according to the Journal's poll.
On Jan. 26, ANS fell 29 cents to close at $65.46, WTI fell 44 cents to close at $60.63 and Brent fell 29 cents to close at $65.59.
ANS jumped 90 cents Jan. 23 to close at $65.12, while WTI leapt $1.71 to close at $61.07 and Brent leapt $1.82 to close at $65.88.
Crude fell Jan. 22, taking ANS $1.01 lower to close at $64.22, as WTI shed $1.26 to close at $59.36 and Brent slid $1.18 to close at $64.06.
ANS gained 63 cents Jan. 21 to close at $65.23, while WTI rose 28 cents to close at $60.62 and Brent rose 32 cents to close at $65.24.
ANS gained $2.46 over the trading week from its close of $64.60 Jan. 20, to its close of $67.06 Jan 27.
A calm in Venezuela As Iran has grabbed the geopolitical spotlight, the risk of warfare expansion in Venezuela has subsided.
The Trump administration is taking steps to oversee and control oil sales of Venezuela's state-owned PdV -- potentially spawning serious short-term implications for oil markets, particularly if accompanied by easing of U.S. sanctions, Argus said in a note.
In the short term, the prospect of Venezuelan crude flowing more freely to Gulf coast refiners could lead to a modest boost to output -- perhaps 250,000 barrels per day in the next 12 months, some analysts suggest, Argus said.
"Longer term, there is much bullish rhetoric from the White House on how U.S. oil firms can rehabilitate the country's upstream sector and 'make Venezuela great again,'" Argus said. "But how plausible those objectives are will depend on how much support Washington can provide, given the billions of dollars of capital spending required."
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