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Oil Trading Lower as Trump Extends U.S. Ceasefire on Iran

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Oil prices eased early Tuesday after the United States extended a ceasefire with Iran, in favor of continuing peace talks with the country.

West Texas Intermediate crude oil for June delivery was last seen down $0.37 to US$108.29, falling off the highest since April 7. July Brent oil was last seen down $1.66 to US$110.44.

The Wall Street Journal cited U.S. President Trump saying the U.S. agreed to hold off fresh attacks on Iran at the request of Persian Gulf nations and will continue to look for negotiations to end the war that has blocked 20% of daily oil demand shipped through the blockaded Strait of Hormuz.

"The President, at the request of several Gulf states, suspended a planned Tuesday attack, allowing what he described as "serious negotiations" to continue. No ships have reportedly left Iran's main export terminal during the past 10 days, potentially increasing the prospects for a deal. Overall, traffic through the Strait of Hormuz remains only a fraction of pre-war levels, despite the waterway accounting for roughly one-fifth of global oil supply," Saxo Bank noted.

Oil has gained 62% since Feb. 28, when the U.S, and Israel launched their war on Iran, which responded by blocking the Strait, shutting off exports of oil and raising refined-product prices ahead next weekend's Memorial Day holiday in the United States, which launches the high-demand summer driving season.

"The likely path forward this summer is a steady draw down in jet fuel, diesel and gasoline," Bjarne Schieldrop, chief analyst commodities at SEB Research, wrote.

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