Oil News: Bearish Oil Outlook Grows as Diplomacy and Inventory Pressure Build
Key Points:
- API reported a 4.2 million-barrel crude inventory build against expectations of 600,000, adding pressure to sellers.
- Brent crude dropped more than 3% Wednesday, on pace for its largest weekly decline since June on Hormuz relief trade.
- Five commodity vessels crossed Hormuz Tuesday versus a 10-day average of 15, far below pre-war shipping levels.
Crude oil futures are falling for a third session because traders decided the Strait of Hormuz is reopening. It has not reopened. Iran and Oman discussed a temporary shipping corridor on Wednesday and agreed to start clearing mines from the waterway. Oman’s foreign minister said an announcement could come soon. That was enough. War premium started coming out of both contracts immediately. The API reported a 4.2 million-barrel build in U.S. crude stockpiles on top of it. The combination drove WTI below $81 and Brent below $86, with both contracts hitting their lowest levels since August 10. Brent is falling faster because it sits closer to the Gulf barrels the market is repricing. Five commodity vessels crossed Hormuz on Tuesday. Before the war, the strait carried about one-fifth of global seaborne oil and LNG shipments. The market is trading a headline while the waterway is still barely functioning.