Oil Prices Head For Weekly Decline After Israel-Iran Ceasefire Eases Supply Concerns

Oil prices were on track for a weekly decline despite a slight upward movement in Asia trading hours on Friday, as the ceasefire in the Middle East continued to outweigh a positive demand outlook.

Benchmark Brent crude prices rose 0.6% at 67.11 per barrel, while U.S. West Texas Intermediate crude prices gained 0.6% at $65.65 per barrel at 6.02 GMT. On a weekly basis, both contracts were on course to fall 12% this week.

Oil prices dropped sharply on Tuesday after U.S. President Donald Trump declared a ceasefire between Israel and Iran, which brought an end to a 12-day conflict that had threatened oil supply from the Middle East.

However, data from the U.S. Energy Information Administration, released on Thursday, showed that domestic crude oil stocks, excluding the Strategic Petroleum Reserve, fell by 5.8 million barrels to 415.1 million barrels, marking a fifth consecutive weekly decline. The country’s refinery capacity use rose by 1.5% to 94.7%.

Reuters reported, citing Phil Flynn, a senior analyst with the Price Futures Group, that the market is starting to digest the fact that crude oil inventories are very tight all of a sudden. In comparison, reports suggested that Trump was planning to select the next chief of the U.S. Federal Reserve early, raising hopes of a dovish monetary policy.

However, on Thursday, oil prices eased from intraday highs after CNN reported that Washington has discussed offering incentives to restart talks with Iran, including possibly easing sanctions.

Retail sentiment on Stocktwits about the United States Oil Fund was in the ‘extremely bullish’ (77/100) territory on Thursday, while retail chatter remained ‘extremely high.’

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