Oil Rebounds as SPR Sinks to 1982 Levels; Gas Rallies
WTI and Brent oil pushed higher as the U.S. Strategic Petroleum Reserve fell to 289.7 million barrels, its lowest since 1982. Iran and Oman struck a Hormuz revenue-sharing deal that leaves the strait effectively blocked.
Crude oil rebounded on Wednesday as traders weighed a drop in strategic petroleum reserves to levels last seen in 1982 against a fresh revenue-sharing deal between Iran and Oman covering the Strait of Hormuz.
Front-month WTI futures rose on the session, trying to reclaim the $82.00–$82.50 support zone after earlier weakness. Brent oil also recovered from the previous day's sell-off, trading back toward $88.00 as market participants bet the U.S. would push Oman to scrap the deal, according to the Islamic Revolutionary Guard Corps.
The U.S. Strategic Petroleum Reserve fell to 289.7 million barrels from 293.4 million barrels a week earlier, the EIA reported Wednesday. That is the lowest level since 1982. The drawdown comes as the Strait of Hormuz remains effectively blocked, the report noted. The U.S. has consistently opposed any fee regime in the waterway.
Iran's IRGC said it reached a revenue-sharing agreement with Oman covering the strait, though the deal does not guarantee a full reopening. The U.S. has always opposed any fees on transits through the Strait of Hormuz.
Crude inventories rose by 0.1 million barrels in the latest week, below the 0.6 million barrel increase analysts had forecast. At current levels, crude inventories sit 1% above the five-year average for this time of year.
Gasoline stocks fell by 2.5 million barrels, compared with expectations of a 0.7 million barrel decline. Distillate inventories dropped 2.2 million barrels.
U.S. crude oil imports declined by 435,000 barrels per day from the prior week, averaging 6.2 million bpd. Over the past four weeks, imports averaged 6.6 million bpd.
Domestic crude production edged up to 13.843 million barrels per day from 13.830 million bpd, supported by sustained high prices.
Natural gas rallied as traders focused on hotter weather forecasts ahead of Thursday's EIA storage report. The report is expected to show a 19 Bcf build for the week ended.
Gas climbed above resistance at $2.75–$2.80 and is moving toward the 50-day moving average at $2.94. A close above that level clears a path to the $3.00–$3.05 zone. The RSI sits in moderate territory, leaving room for further upside if catalysts emerge.
Saudi Arabia raised the official selling price for its Arab Light crude to Asian buyers in a signal the kingdom expects demand to hold.
Brent oil faces resistance at $91.00–$91.50 and then $95.50–$96.00 on the upside, with support at $86.00–$86.50 and the 50-day MA at $83.80.
A successful test of the $82.00–$82.50 support level would open the way toward resistance at $86.00–$86.50 for WTI.
It remains unclear whether markets will continue to look through the Hormuz disruption if the strait stays shut over the coming weeks.
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