WTI Holds Above $90 Amid Volatile Iran Bets, Dollar Spike


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECUAUCUS, NJ (DTN) - Oil prices fell for a second day in a row Friday (6/5) 
on lingering hopes for a diplomatic breakthrough to the U.S.-Iran war and 
reopening of the Strait of Hormuz to energy shipments. A two-month high in the 
dollar, driven by the release of a bullish U.S. jobs report for May, added to 
the pressure on prices of commodities, including crude.

   Notwithstanding the back-to-back daily losses, the global and domestic crude 
benchmarks still secured a net weekly gain to snap a two-week consecutive slide.

   The downward pressure was reinforced mid-day after Petroleum Development 
Oman confirmed that export operations at the 800,000-bpd Mina al Fahal terminal 
were proceeding normally after a scare triggered by reports of a drone attack.

   NYMEX WTI crude for July delivery slid $2.50 to settle at $90.54 bbl. The 
2.7% drop on the day was not enough to wipe out the U.S. crude benchmark's 
strong gains from Monday through Wednesday, leaving it up 3.6% on the week.

   ICE Brent crude for August delivery fell $1.94, or 2%, to finish Friday's 
session at $93.09 bbl, holding on to a weekly advance of 1%.

   In contrast to the weaker crude complex, refined product futures diverged in 
Friday's trade. On NYMEX, ULSD for July delivery edged down $0.0864 to finish 
at $ 3.5874 gallon. But July RBOB advanced $0.0076 to settle at $3.0459.

   The broader macroeconomic complex felt additional pressure following a 
stronger-than-expected nonfarm payrolls report from the Bureau of Labor 
Statistics, which showed the U.S. economy adding 172,000 jobs in May. The 
robust employment data initially lifted the U.S. dollar index above 100 points, 
the first time it has returned to that level since April 5.

   On the geopolitical front, market participants spent the day balancing 
conflicting signals out of Washington and the Middle East regarding shipping 
security.

   While U.S. President Donald Trump insisted that negotiations were moving 
forward and that the Strait of Hormuz could open immediately upon a signing, 
traders remained cautious given Hezbollah's outright rejection of the 
provisional Lebanon ceasefire.  Iran has made the safety of its Hezbollah ally 
a precondition to any deal with the U.S.

   Supply realities further cushioned the downside in oil prices as a U.S. 
maritime blockade of Iranian trade marked its seventh full week, leaving the 
Persian Gulf entirely devoid of outbound crude streams.

   This structural crude deficit, paired with compounding Ukrainian drone 
strikes on Russian refining infrastructure, ensured that global physical 
balances remained tight enough to sustain the weekly price recovery.




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