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EMEA Oil Update: Crude Prices Headed for Weekly Loss

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Global crude oil markets are pacing toward a fourth consecutive week of declines on Friday, as a rapid recovery in supply flows through the Strait of Hormuz signals an oversupplied prompt market, analysts said.

The Front-month Brent futures contract were steady at $71.82 per barrel. Murban futures fell about 1% to $65.85/bbl. Both contracts were headed for a weekly loss this week.

"The oil market is on target for a fourth consecutive week of declines as flows through the Strait of Hormuz increase, with ICE Brent edging closer towards $70/bbl," ING analysts said.

The supply relief stems from both Saudi Arabia and the UAE aggressively ramping up export volumes toward pre-war capacities.

Bloomberg ship-tracking data revealed that 14 million barrels of crude cleared the vital Strait of Hormuz chokepoint on July 1 alone, with Saudi Arabia's flows recovering to roughly 90% of their pre-February levels.

This return of physical barrels, combined with ongoing US Strategic Petroleum Reserve releases, has placed intense pressure on the front end of the ICE Brent forward curve, analysts noted.

"The increase in oil flows is putting growing pressure on the front end of the ICE Brent forward curve. It's increasingly moving into contango, a sign of an oversupplied prompt market. The return of this supply coincides with continued SPR releases," ING said.

Looking ahead, investor positioning ahead of the US holiday weekend has triggered some short-covering and position squaring, stalling the immediate sell-off.

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