Oil slightly rose in price before the long weekend in the US amid peace efforts
Kyiv • UNN
Brent and WTI crude oil futures rose on Friday ahead of the long weekend in the US. The market shows cautious optimism regarding peace efforts between the US and Iran, despite the persistence of risks.
Oil prices edged higher on Friday ahead of the long U.S. holiday weekend, as cautious optimism persisted regarding peace efforts in the Middle East between the United States and Iran, writes UNN citing Reuters.
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Brent crude futures rose 46 cents, or 0.64%, to $72.26 per barrel at 04:07 GMT (07:07 Kyiv time). West Texas Intermediate crude prices increased by 32 cents, or 0.47%, to $69.01 per barrel.
U.S. markets will be closed on Friday ahead of U.S. Independence Day on Saturday.
During the previous session, both benchmarks hit their lowest levels since the start of the U.S.-Israeli war against Iran in late February. Over the week, Brent rose 0.35% and WTI rose 0.43%, marking the smallest weekly change for both benchmarks in recent months.
"This is a case of cautious optimism: the market wants to believe that peace efforts will be successful, but is still hedging until it sees real evidence on the water," said Tim Waterer, chief market analyst at KCM Trade.
Shipping through the Strait of Hormuz partially resumed, as anticipated in the initial agreement between Iran and the U.S., after the two countries exchanged strikes over the weekend following Iran's attack on a cargo vessel.
Producers in the Gulf countries are working to ramp up production after the reopening of the Strait of Hormuz, through which one-fifth of the world's daily oil and LNG supplies passed before the war.
As a source familiar with the situation told Reuters on Thursday, Kuwait's oil production surged in June to 1.65 million barrels per day from 580,000 barrels per day in May, as the OPEC member increased exports following the temporary peace deal between the U.S. and Iran.
Additionally, at least five supertankers carrying a total of 10 million barrels of Saudi oil have left the Strait of Hormuz, as Saudi Aramco shifted to spot prices to accelerate sales in Asia, according to trade sources and shipping data.
With growing supply pressure, the spread between the next-month Brent price and the one-month forward price turned negative on June 24, while the six-month forward spread turned negative on Thursday. When this spread is negative, the market is in contango.
"The return of this supply coincides with the ongoing release of stocks from the U.S. Strategic Petroleum Reserve," said a note from ING analysts published on Friday.
They added that with "the forward curve shifting into contango, we may begin to see an increase in buying volumes in the market."