Brent loses momentum as market eyes Hormuz reopening

The front-month ICE Brent contract has lost by $1.65/bbl on the day, to trade at $108.74/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

US crude oil inventories declined by a 9.1 million bbls in the week ending 15 May, according to the latest US inventory report by the American Petroleum Institute (API). The decline exceeded market expectations of a 3.4 million-bbl draw.

A decline in US crude stocks could indicate improved demand for oil and can put some upward pressure on Brent's price.

“We’re [the US] exporting record volumes of crude (hitting over 5-6 million barrels per day in recent weeks as global buyers flock to U.S. barrels), which is tightening domestic balances,” remarked Price Futures Group’s senior market analyst Phil Flynn.

Downward pressure:

Brent crude’s price has edged lower as market participants balance the risk of renewed US strikes on Iran against hopes for a potential peace agreement, according to analysts.

The North Atlantic Treaty Organization (NATO) is discussing ways to helps commercial ships pass through the Strait of Hormuz, if the waterway is not reopened by early July, Bloomberg reports.

Meanwhile, US Vice President JD Vance said talks with Tehran have “made a lot of progress” and neither side wants to see renewed military actions, Reuters reports.

“Oil no longer trades purely on barrels. It trades on confidence that the shipping lanes of global capitalism remain open for business,” SPI Asset Management managing partner Stephen Innes said.

By Aparupa Mazumder

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