Crude oil prices have been trending lower over the past couple of days, but the benchmarks are on course to book both a weekly and a monthly rise. On a monthly basis, Brent crude and West Texas Intermediate have both gained close to 20%.
At the time of writing, Brent crude was trading at $87.67 per barrel, and WTI was changing hands for $82.07 per barrel, both down by 1% from Thursday on reports about more tankers crossing the Strait of Hormuz even as hostilities between Iran and the United States continue.
“There is this sense that there is a lot of supply waiting to hit the market once all of this is resolved, and that is a weight against any kind of dramatic price rise,” Again Capital partner John Kilduff said, as quoted by Reuters.
The number of tankers crossing Hormuz is still a fraction of what traffic used to be before the U.S. and Israel first struck Iran on February 28 but it appears any news of improvement in traffic results in lower futures prices, regardless of the degree of that improvement.
“Though still in single digits, there are also reports that the shuttling of oil across the strait has resumed. This will not be detected by tracking data, given that transponders will be turned off,” ING commodity strategists wrote in a note today. They also cited U.S. Energy Secretary Chris Wright as saying some 13 million barrels daily were leaving the Persian Gulf.
On the bullish side, however, the U.S. Strategic Petroleum Reserve is running low, and releases will have to stop soon, as already noted by the Department of Energy. The SPR has helped keep prices under control in previous months, but once the draws end, prices will rise.
On the bearish side, Saudi Arabia said it was seeking partners for a defense-strengthening coalition this week, to focus on the Ban el-Mandeb Strait and the Gulf of Aden. According to Riyadh, 14 countries have officially supported the initiative. The countries include Turkey, Pakistan, Egypt, Sudan, and Djibouti.
By Irina Slav for Oilprice.com
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