Brent eases on hopes of positive US-Iran talks in Doha

The front-month ICE Brent contract has declined by $1.07/bbl on the day, to trade at $71.82/bbl at 09.00 GMT.

IMAGE: Cylindrical oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has felt some upward pressure after the American Petroleum Institute (API) reported a sizeable decline in US crude stocks.

US crude oil inventories recorded a decline of 6.1 million bbls in the week ending 26 June, according to estimates from the API.

A fall in US crude stockpiles is generally seen as a sign of stronger oil demand and can provide upward support to Brent’s price.

“Numbers overnight from the API show that US crude oil inventories continue to fall despite some normalisation in Persian Gulf flows,” two analysts from ING Bank noted.

Downward pressure:

The global oil market has continued to remain optimistic on a supply recovery from the Persian Gulf, despite recent fire exchanges between the US and Iran, market analysts said.

Indirect talks between Washington and Tehran are expected to continue in Doha, Qatar, this week, adding some positive outlook to the ceasefire negotiations.

“Oil prices came under further pressure… dragged down by growing confidence that Persian Gulf crude flows are on the mend,” ING Bank’s analysts said.

There has been a small uptick in inbound vessel traffic in the Strait of Hormuz, suggesting that vessel owners are becoming increasingly confident about moving into the Persian Gulf.

The market has “seen a tentative pick-up of vessels transiting the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said, adding about 24 ships, including oil and LNG tankers, travelled through the key waterway on Monday.

By Aparupa Mazumder

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