WTI at $66 on Iran Tensions; Gasoline, ULSD at 2-Mo High


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures jumped more than 3% Thursday (1/29), 
hitting five-month highs, as Iran announced military exercises in the Persian 
Gulf that added to tensions already running high from threats of U.S. military 
strikes against the Islamic republic.

   Gasoline and ULSD futures reached their highest levels in two months as the 
U.S. Dollar Index remained in negative territory against a basket of currencies 
though off from Wednesday's four-year lows. A weaker dollar enhances the global 
competitiveness of U.S. fuel exports, while record net volumes and lower 
shipping costs further support domestic refining margins.

   Oil prices rallied for a third straight day after U.S. President Donald 
Trump warned Iran to enter into nuclear disarmament talks with Washington 
immediately or face military strikes. Trump wrote on his Truth Social media 
site that U.S. warships positioned in the Persian Gulf were ready to fulfill 
their mission "with speed and violence, if necessary."

   The Associated Press, meanwhile, reported that Iran had issued a warning to 
ships at sea that it planned to run a drill next week that would include live 
firing in the Strait of Hormuz.

   The strait, straddling Iran and the Arabian Peninsula, is a chokepoint 
through which more than a fifth of global oil supply flows daily.  Oil markets 
have been on tenterhooks over the security of Middle East oil supplies since 
mass civilian protests broke out a few weeks ago, killing thousands of people 
in Iran, which produces about 3.2 million bpd, according to OPEC.

   Adding to the bullish fervor in oil was the U.S. Energy Information 
Administration's weekly inventory showing a 2.3 million bbl decline in crude 
stockpiles last week, and a smaller-than-expected rise in distillate fuel oil 
balances.

   Data on Thursday showing a near 95% jump in the U.S. trade deficit for 
November and higher-than-expected weekly U.S. unemployment claims did not 
impact energy market sentiment.

   NYMEX WTI futures crude for March delivery settled up $2.21, or 3.5%, at 
$65.42 bbl after peaking at $66.48 -- its highest since August.   

   ICE Brent crude for March delivery closed up $2.31, or 3.4%, at $70.49 bbl, 
after a five-month high at $71.89.

   Downstream, NYMEX RBOB futures for March delivery advanced by $1.9336 to 
$1.9336         gallon, while ULSD futures for March rose $0.0403 to $2.4872 
gallon.

   The U.S. Dollar Index slid by 0.144 points to 96.13 against a basket of 
currencies.




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