Crude Gains as Peace Deal Doubts Grow
by Bloomberg | Paul Burkhardt, Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil edged higher as traders parsed discordant signals on the prospects of a US-Iran peace deal.
West Texas Intermediate rose 1.7% to settle near $94 a barrel, while Brent closed at $96. Prices climbed Tuesday on headlines from Iranian news agencies that cast doubt on progress in the talks, as well as an Agence France-Presse report that Hezbollah won’t accept a partial ceasefire with Israel. A truce in Lebanon had been cited by Iranian officials as a condition for a broader peace agreement.
The barrage of price-supportive headlines reversed early session losses that were triggered by de-escalatory comments from Washington. President Donald Trump said a memorandum of understanding with Iran to reopen the Strait of Hormuz could happen over the next week, according to ABC News, which cited a telephone conversation with Trump.
The primary focus for the oil market remains the Strait of Hormuz, which handled about one-fifth of global oil and liquefied natural gas flows before the war began. Visible commercial traffic through the waterway remains limited as the renewed strains in US-Iran diplomacy add to shipping uncertainty.
“If the US or Iran’s stance leads to a more prolonged closure of the Strait, OECD stocks could reach a critical threshold by mid-September, triggering a price spike towards $150 per barrel,” said Bridget Payne, head of energy forecasting at Oxford Economics, referring to crude stockpiles.
The lack of clarity over the potential extension of the current ceasefire — and the future of flows through the Strait of Hormuz — has buffeted oil prices, which fell last month on optimism that a deal could be reached.
Adding to the confusion, Trump and Israeli Prime Minister Benjamin Netanyahu earlier offered differing accounts of a call about the fighting in Lebanon. A US-brokered ceasefire between Tel Aviv and Iran-backed Hezbollah should be extended from Beirut to include the entirety of Lebanese territories, with more negotiations taking place on Tuesday and Wednesday, the Lebanese presidency said in a post.
Price volatility has forced dealers to scale back their risk exposure, pushing open interest in the global benchmark to the lowest since August.
“Clients are tired,” Goldman Sachs Group Inc. Co-Head of Global Commodities Research Daan Struyven told Bloomberg TV. “It’s a challenging trading environment with headlines moving prices up and down. Positioning in oil markets is significantly more limited than at the start.”
Commodities are in a “super-squeeze” that will worsen if Hormuz remains effectively shut, analysts at HSBC Holdings Plc said in a report.
Oil Prices
Oil prices rose as doubts emerged over a US-Iran peace agreement.
- WTI for July rose 1.7% to settle at $93.76 a barrel in New York
- Brent for August delivery edged up 1.1% to settle at $96 a barrel
by Bloomberg | Paul Burkhardt, Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas