Oil Futures Rise as Strait of Hormuz Remains Closed

Stock futures declined Sunday as investors reacted to the continued closure of the Strait of Hormuz. Futures tied to the Dow Jones industrial average fell 174 points, or 0.35 percent. S&P 500 futures dropped 0.26 percent and Nasdaq futures lost 0.32 percent.

U.S. oil futures rose 1.75 percent to $107.26 a barrel while Brent crude climbed 1.32 percent to $110.70. Gold fell 0.37 percent to $4,545 per ounce. The U.S. dollar gained 0.09 percent against the euro and 0.06 percent against the yen. The yield on the 10-year Treasury rose 1.6 basis points to 4.611 percent.

The 30-year Treasury yield reached 5 percent for the first time in two decades.

Last week the U.S.-China summit did not produce an agreement that would reopen the strait. Officials met with national security advisers on Saturday at a Virginia golf club to discuss the situation. A follow-up meeting is scheduled for Tuesday in the White House Situation Room.

Officials stated that the clock is ticking for Iran and warned that if a better deal is not reached the country would face stronger measures. Talks between the U.S. and Iran remain stalled.

JPMorgan predicted that commercial oil inventories in the developed world could approach operational stress levels by early June. Capital Economics warned that oil stockpiles could reach critically low levels by the end of June. UBS analysts said inventories are approaching record lows and buffers have largely been exhausted.

The same analysts noted that oil prices could become more volatile and highlighted the risk of panic buying if physical dislocation intensifies while the strait remains closed.