Oil prices ended 2.5% lower Tuesday after investors reacted to some signs of Middle East crude exports recovering. Prices were still on track for monthly gains, even though they fell on the day, amid continued worries about supplies in the wake of the war between the United States and Israel over Iran. Brent crude futures closed down $2.69 at $102.59 a barrel, while US West Texas Intermediate (WTI) crude fell $3.22 to settle at $89.38.
The downward price pressure was mainly due to better export flows. Supply concerns have eased due to more flows coming through the Saudi East-West pipeline and continued talks with Iran, BOK Financial’s senior vice president of trading, Dennis Kissler, said. As more oil is able to exit the Middle East region successfully, the bargaining chips Iran has in the conflict are counting down, Kissler said.
The other side of the story is also favorable, as Saudi Arabia restarted oil tanker loadings from its Red Sea port of Yanbu. It came after a successful restarting of the Saudi Aramco’s operated East-West Pipeline, which had given a positive boost to the regional outlook for oil deliveries. In addition, Kpler data for September indicated that exports of crude oil from the Middle East producers returned to the 16.328 million bpd level, the highest since the US-Israeli war on Iran started in late February.
Meanwhile, US President Donald Trump said he has made no concessions to Iran to end the conflict. This rejected report in the rejected media that the US may relax the sanctions or release the frozen money in return for tangible measures in the field of nuclear program in Iran.
Refined fuel markets were mixed Tuesday as European diesel futures pulled back and US diesel futures rose 2.6%. The White House has been pushing the European Union to use its emergency diesel stocks to help bring down world supply prices. The Trump administration pointed out, however, that some member nations have not released so much oil and refined product from their stockpiles as they had agreed to do.
The US administration is hoping to provide regulatory flexibility to allow more red-dyed diesel fuel to be sold to help ease high domestic fuel prices. According to sources with knowledge of discussions this move may be a way for certain buyers to bypass the federal fuel tax, and it’s becoming a primary alternative in the wake of an extremely limiting diesel export ban. In the meantime, early data from the industry indicated that stocks of U.S. crude oil and gasoline were probably down last week while stocks of distillate and other products were largely unchanged.
