October Brent slipped to $79.21 as Iran and Oman prepared a joint shipping deal. ING strategists said a US-Iran accord is the next catalyst for resumed flows through Hormuz.
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Crude futures edged lower Thursday after reports that Iran and Oman are working on a shipping arrangement that could partially reopen the Strait of Hormuz.
October Brent crude fell 0.3% to $79.21 a barrel by midmorning in Asia. September WTI slipped 0.39% to $74.93.
ING Think commodity strategists Warren Patterson and Ewa Manthey said the market is pinning its hopes on a US-Iran deal that would resume energy flows through the strait. Iran announced it had reached an agreement with Oman on new shipping arrangements, with a joint statement now being prepared, the strategists said in a note Thursday.
"Iran has insisted that the agreement must proceed without interference from unnamed third parties – a formulation that, in practice, almost certainly refers to the US," they wrote. "The real hinge point now becomes the trajectory of US-Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume."
On the supply side, US commercial crude inventories rose 2.5 million barrels in the week ended July 31, according to the Energy Information Administration. At 407 million barrels, stocks sit about 6% below the five-year average for this time of year.
Gasoline inventories fell 1.6 million barrels, while distillate fuel stocks dropped 3.5 million barrels. Both categories remain below their five-year seasonal averages – gasoline by 7%, distillates by 12%.
Total products supplied over the last four weeks averaged 20.4 million barrels a day, down 0.9% from a year earlier. Motor gasoline demand rose 0.6% over the same period, while distillate and jet fuel demand climbed 1.8% and 3.6%, respectively.
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