WTI Below $100 Ahead of Hormuz Diplomacy, Fed


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - Crude prices retreated Tuesday (10/27), with WTI 
settling beneath the key $100 bbl mark, as traders weighed diplomatic efforts 
in Tehran against mounting physical supply risks in the Middle East.

   Broader caution ahead of the Federal Reserve's upcoming interest rate 
decision and firming U.S. dollar positioning also pressured energy futures into 
the close despite initial intraday advances across crude and refined products.  

   NYMEX WTI crude for December delivery fell $1.86, or 1.83%, to settle at 
$99.90 bbl, after rising to $102.82 during the session. 

   ICE Brent for December delivery closed down $1.93, or 1.7%, at $113.88 bbl. 
The session high was $116.95 versus a low of $113.35. 

   Downstream, NYMEX ULSD for November delivery eased $0.1368, or 2.79%, to 
finish at $4.7752 gallon. It peaked at $4.9541 for the day. 

   RBOB for November retreated $0.0809, or 2.51%, to end the session at $3.1376 
gallon. It hit an intraday high of $3.2575. 

   By 2:53 p.m. ET, the U.S. dollar index gained 0.365 points to 102.165 
against a basket of currencies, placing additional cap on dollar-denominated 
commodities. 

   Diplomatic headlines initially offered modest market relief following talks 
in Tehran on Monday between Iranian officials and mediators from the newly 
formed Mecca Defence Alliance, comprising Saudi Arabia, Turkey, and Pakistan.

   While both sides agreed to maintain dialogue to prevent further regional 
military escalation, market participants noted the lack of any formal 
cease-fire or binding agreement to end attacks on vital maritime corridors.

   Physical supply concerns continue to underpin underlying market fundamentals 
despite Tuesday's price retreat. Ship-tracking data indicates crude exports 
from the Persian Gulf have slipped to approximately 65% of pre-conflict levels, 
down from 90% at the start of October, as intensifying anti-ship missile 
threats discourage tanker transit through the Strait of Hormuz.

   Uncertainty also persists regarding Saudi Arabia's East-West pipeline 
capacity following claims by Tehran-aligned Houthi forces that they targeted a 
key pumping station along the bypass route. With Saudi Aramco yet to clarify 
the scope of potential damage, questions remain over the kingdom's ability to 
maintain full crude divertability to the Red Sea port of Yanbu.

   Macroeconomic positioning further constrained buying interest, with market 
participants adjusting portfolios ahead of Wednesday (10/28) afternoon's 
Federal Open Market Committee rate decision and press conference. Additional 
geopolitical focus remains trained on Israel's general election on Tuesday, as 
traders assess how the political outcome could impact upcoming military 
strategy across the region.




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