Oil prices made small gains on Thursday as buyers sought to assure supply over the long U.S. Independence Day weekend.
“We’re seeing a little short-covering here,” said John Kilduff, partner with Again Capital. “The focus has shifted to how much supply are we going to see in the markets from how much supply are we going to lose.”
Brent futures settled at US$71.80 a barrel, up 23 US cents or 0.32 per cent. U.S. West Texas Intermediate crude finished at US$68.69 a barrel, up 11 US cents, or 0.16 per cent.
During the session, both benchmarks hit their lowest levels since before the U.S.-Israeli war on Iran began in late February. For the week, Brent finished down 0.60 per cent, while WTI was down 0.78 per cent.
Mediator Qatar said the U.S. and Iran made progress in talks toward a permanent peace agreement ending the four-month war that shut the key oil shipping through the Strait of Hormuz.
The talks made “positive progress” on matters related to the memorandum that halted the war in June, a Qatar Foreign Ministry spokesperson said in a post on X. There was no sign yet that the sides made headway towards a lasting peace.
The next meeting between Iran and U.S. negotiators will take place after July 9 funeral processions for Iran’s late Supreme Leader Ayatollah Ali Khamenei, the Qatar ministry added.
“Oil has been flowing out of the Strait of Hormuz, while at the same time we’re also pouring oil out of strategic reserves. And on top of that, crude oil buying from China and oil demand has not really properly revived yet,” said Bjarne Schieldrop, chief commodities analyst at SEB.
“This could be sort of a dynamical picture of price moving down sharply and then rebounding at some point.”
At least five supertankers carrying a total of 10 million barrels of Saudi oil loaded from Ras Tanura have exited the Strait of Hormuz, with Saudi Aramco switching to spot pricing to speed up sales in Asia, according to trade sources and shipping data.
“It seems the refineries can get as much oil as they need, but squeezing it out of the refineries is harder,” said Phil Flynn, senior analyst with the Price Futures Group. “The market thinks the Iran situation is getting better but there are going to be ups and downs, but it’s getting better.”
U.S. crude stocks fell to their lowest last week since 2018 as domestic refinery demand rose, while gasoline inventories also declined, the Energy Information Administration said on Wednesday.
UBS cut its Brent forecasts, citing the increase in oil shipping through the Strait of Hormuz, through which 20 per cent of the world’s oil is carried by tanker ships. The bank lowered its Brent crude price forecasts. It cut its third-quarter estimate by US$25 per barrel to US$80 and reduced its fourth-quarter forecast by US$10 per barrel to US$80. It trimmed its 2027 outlook by US$10 per barrel to US$75.
Analysts at HSBC expect the market “to absorb returning Middle East barrels through gradual restocking, alongside the end of IEA strategic stock releases in July.”
“As the near-term ‘mini-glut’ fades, Brent could move back towards US$80/b or higher,” the HSBC note said.
Meanwhile, Nigeria has become the first OPEC member to join the International Energy Agency as an associate member, a step that deepens ties between the global energy watchdog and Africa’s largest oil producer.
Elsewhere, Ukrainian forces struck the Lukoil-Nizhegorodnefteorgsintez oil refinery in Russia’s Nizhny Novgorod region, Ukraine’s General Staff said on Thursday.