Oil Down as U.S.-Iran Talks Begin, 6-Week Rally to End


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude to oil product futures were down Friday morning 
(2/6), heading for their first weekly drop in seven weeks, as the start of 
U.S.-Iran talks pared supply risks across energy markets.

   Iran's Foreign Minister Abbas Araghchi was quoted telling reporters that the 
talks in Oman got off to a "good start" and that negotiators will return to 
their capitals for consultation, before the continuation of more discussions at 
a date and venue to be decided later.

   Tensions over Iran were largely responsible for January's 11% rally in crude 
as U.S. President Donald Trump repeatedly threatened the use of force unless 
Tehran engaged diplomatically with the White House, which wants to dismantle 
the Islamic republic's nuclear program.

   Energy markets are closing following the talks due to concerns over the 
security of Middle East energy supplies. Iran produces 3.2 million bpd, 
according to OPEC, and straddles the Strait of Hormuz, where roughly a fifth of 
the world's seaborne oil trade passes.

   The talks in Oman marked the resumption in negotiations that had been 
discontinued since June.  Araghchi was quoted saying that the "wall of mistrust 
should be overcome" by the two sides despite reports of a standoff between U.S. 
negotiators wanting curbs on Iran's missiles too, while Iranian officials 
insisted that the talks should be limited to its nuclear program.

   NYMEX WTI crude futures for March delivery were down $0.60, or 1%, to $62.69 
bbl, extending the near-3% drop in the prior session. For the week, WTI was 
headed for a decline of 3.5%, ending a six-weekly rally.

   April ICE Brent slid $0.43, or 0.6, to $67.12 bbl. Brent was on track to 
lose 5% on the week.

   Downstream, March ULSD fell $0.0204 to $ 2.3728 gallon, while March RBOB 
futures eased by $0.0058 to $ 1.9208 gallon.

   The U.S. Dollar Index slipped 0.151 points to 97.545, helping limit some of 
the downside in oil.




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