Oil & Energy
US Oil Update: Crude Steadies on US-Iran Peace Deal Hopes, Inventory Draw
Crude oil futures were little changed in midday trading on Thursday as optimism for a US-Iran peace deal to end the Middle East conflict gained momentum, with a larger-than-expected drop in US crude inventories lending further price support.Front-month West Texas Intermediate crude futures eased by 0.05% to $95.22 per barrel, while Brent futures were down 0.55% to $100.64/bbl."EIA data showed US commercial crude inventories fell by 2.3 million barrels last week, smaller than the 8.1 million-barrel draw reported by the API and slightly below market expectations of a 2.4 million-barrel decline," ING strategists said in a note on Thursday.US crude and fuel inventories continued to draw down last week, with the latest data from the Energy Information Administration showing that crude oil inventories decreased by 2.3 million barrels to 457.2 mmbbls.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, the EIA said, adding that crude oil production dropped by 13,000 b/d to 13.6 mmb/d.Iran is reportedly set to deliver a response to the US's one-page memorandum of understanding through Pakistan, the mediator in the US-Iran talks, in the next two days. However, Iran hasn't indicated whether it will accept the terms.Rystad Energy strategists said Iran's Revolutionary Guard has remained silent on the US proposal, a departure from past episodes in which it responded to US initiatives.The analysts said the lack of comment could signal that the proposal is being considered seriously at senior levels in Tehran.The memorandum of understanding would reportedly allow for the gradual reopening of the Strait of Hormuz and the lifting of the US's blockade on Iranian ports.On Wednesday, Trump said the US would lift its blockade "assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption," adding that "if they don't agree, the bombing starts."Amena Bakr, head of Middle East Energy at Kpler, said the oil industry has been built around navigating challenges over the decades, and a good indicator of a real deal is when you see energy companies confident it's real and start making decisions on that basis. "We are far from seeing that yet," Bakr said.Elsewhere, the US Treasury Department sanctioned Iraq's deputy oil minister on Thursday, accusing him of involvement in a scheme to help Iran sell its oil in violation of an international embargo by blending it with Iraqi crude.Deputy Minister of Oil Ali Maarij Al-Bahadly authorized trucking several million dollars' worth of Iraqi oil a day to a smuggler who combined it with Iranian crude, Treasury said. Maarij helped falsify documents, enabling the blended product to be smuggled to market disguised as purely Iraqi oil.