Oil Rally Fades as Contract Expiry Looms


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil prices settled up modestly Monday (9/28) as 
contract-expiry volatility and lingering U.S. fuel policy uncertainty offset 
session highs triggered by U.S. President Donald Trump's rejection of Iran's 
Middle East truce proposal.

   Most NYMEX futures rallied earlier in the day, responding to Trump's turning 
down over the weekend of a Tehran offer to lift its blockade of the Strait of 
Hormuz in exchange for an end to the U.S. naval embargo. Media reports of 
Washington considering renewed military strikes against Iran after the midterm 
elections stoked fears that Middle East supply disruptions could stretch into 
November.

   Crude futures, however, surrendered the bulk of their gains into the close 
amid profit-taking and contract roll-over dynamics ahead of front-month futures 
expirations.

   NYMEX October ULSD and RBOB contracts entered their final two sessions ahead 
of Wednesday's expiry, triggering widespread position squaring. 

   NYMEX November WTI crude rose $0.19 to settle at $92.60 bbl, well off its 
session peak of $96.54. November WTI traded as low as $91.25 during the 
session. 

   ICE November Brent settled up $0.96 at $105.28 bbl after touching an 
intraday high of $108.83. 

   That caused the Brent-WTI spread to blow out to around $13 bbl, reflecting 
ongoing market worries that potential U.S. diesel export limits would force 
domestic refiners to cut throughput, dampening U.S. crude demand while 
tightening foreign markets. 

   Physical supply indicators stayed mixed as Middle Eastern crude exports 
rebounded to multi-month highs, though prompt Brent spreads remained heavily 
backwardated at above $7 bbl, keeping the front of the curve firmly supported.

   Downstream, NYMEX October ULSD gained $0.0706 to settle at $4.7553 gallon 
after reaching an intraday high of $4.9079. 

   NYMEX October RBOB turned negative into the close, retreating $0.0557 to 
settle at $3.3377 gallon after peaking at $3.4566 earlier in the day. 

   By 2:26 p.m. ET, the U.S. dollar index gained 0.172 points to 100.880 
against a basket of currencies.

    

    




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