(June 25): Oil was steady following a run of losses that’s erased most of the wartime price gains, with fears of a supply crunch subsiding as more ships transit the Strait of Hormuz after early progress on a peace deal.
West Texas Intermediate traded below US$70 a barrel after tumbling almost 4% in the previous session. Brent crude closed near US$74. Key parts of the market are suddenly awash in supply as buyers find themselves inundated with oil offers from the Middle East and other regions such as Africa.
The US and Iran have both signalled progress after initial discussions to end the war, although claims from the two sides have diverged at times and additional negotiations on topics such as nuclear issues could face hurdles. Early optimism on a lasting agreement has led to an uptick in tankers openly crossing the Strait of Hormuz with their satellite signals switched on.
The rising availability of oil has driven the price of physical barrels lower from Angola to the Middle East. Brent’s prompt spread — a widely watched metric by the market — flipped into a bearish contango structure on Wednesday for the first time since the war started.
Oil futures plunged on Wednesday even after US stockpiles continued to decline. Crude inventories at Cushing, Oklahoma, dropped to around 19 million barrels, below a level that’s considered the operational requirement.
Uploaded by Isabelle Francis
