Oil & Energy
US Oil Update: Futures Slide With Prospects of US-Iran Deal in Focus
Crude oil futures retreated in midday trading on Wednesday, extending losses from the previous session, as signs of progress toward a potential US-Iran agreement eased concerns about supply disruptions in the Middle East.Front-month West Texas Intermediate crude futures fell by 6.93% to $95.17 per barrel, while Brent futures were down 7.55% to $101.59/bbl.Soojin Kim, research analyst at MUFG, said tighter US crude inventories and ongoing Middle East supply risks continue to support prices despite improving sentiment around diplomacy.US crude oil inventories decreased by 2.3 million barrels to 457.2 mmbbls in the week ended May 1, the Energy Information Administration said in its weekly report on Wednesday.The agency said crude oil input to refineries dropped by 42,000 barrels per day from the previous week to average about 16 mmb/d in the week ending May 1. Crude oil production dropped by 13,000 b/d to 13.6 mmb/d.Iran is reviewing a new US proposal, and it will convey its response soon through Pakistan, according to media reports. On Wednesday, President Trump said "Great Progress" has been made on a final agreement to end the war with Iran, without giving more details.Trump said the US would pause its efforts to escort ships through the Hormuz Strait, as White House officials reportedly believe Washington is nearing a one-page, 14-point memorandum of understanding to end the conflict.ING strategists said a deal that normalizes oil flows through Hormuz is crucial, with about 13 million b/d of disrupted supply largely offset by declining inventory.However, Rystad Energy strategists said even if an agreement is reached, the impact on actual oil flows would be slower and more conditional than current price action suggests."A deal announcement would move futures further immediately, in fact, even the potential of a deal is already triggering a decline in oil prices. However, the physical market does not run on political timelines," said Paola Rodriguez-Masiu, Rystad's chief oil analyst.On the supply front, Venezuelan crude exports climbed to a seven-month high of just over 1.05 million barrels per day in April, more than double from January levels, as a revamped licensing framework and easing trade restrictions supported a broader recovery in flows.Kpler said the rebound was driven by stronger demand from traditional buyers, with the US importing about 400,000 b/d and India taking 384,000 b/d.