Oil prices saw a modest uptick during Asian trading on Wednesday, though they remained hovering near three-month lows. Investors are currently weighing the outlook for increased global supply following a reported peace accord between the United States and Iran, while a significant decrease in U.S. crude stockpiles offered some support to the market.
As of 03:14, August Brent crude futures had risen by 0.6% to stand at $79.40 per barrel, and West Texas Intermediate (WTI) futures also climbed 0.6%, reaching $76.52 per barrel.
Both benchmark grades experienced a sharp decline of approximately 5% on Monday, settling at their lowest levels since early March. Brent concluded the session at $78.96 a barrel, while WTI closed at $76.05.
The slight recovery on Wednesday comes after industry data revealed a substantial draw in U.S. crude oil inventories, indicating robust underlying demand in the world’s largest economy.
The American Petroleum Institute (API) reported that crude oil stocks fell by 8.33 million barrels for the week ending June 12th, a figure considerably larger than the projected decrease of 4.5 million barrels.
Gasoline inventories, however, increased by 2.48 million barrels, while distillates, which include diesel and heating oil, saw a marginal decrease of 10,000 barrels.
The substantial reduction in crude oil inventories suggests strong demand and a tighter short-term supply situation in the U.S.
Nevertheless, traders remain focused on the potentially bearish implications of a U.S.-Iran peace deal, which could pave the way for the gradual resumption of shipping through the Strait of Hormuz and the return of additional Middle Eastern oil volumes to global markets.
Under the terms of the agreement, the U.S. would lift sanctions on Iranian ports, and Tehran would resume shipping activities through the Strait of Hormuz.
The pact, slated for signing on Friday, would prevent Tehran from developing nuclear weapons and allow Iran to sell its oil immediately after the document is signed.
Market sentiment has shifted dramatically over the past week amid expectations of reopened shipping routes and the potential re-entry of Iranian exports, leading to a rapid erosion of the geopolitical risk premium embedded in oil prices.
However, uncertainties surrounding the accord’s implementation are capping further declines. Reports indicate that shipping companies are awaiting clarity on security assurances and operational conditions.
Analysts caution that a full normalization of flows may take longer than markets are currently anticipating.
Investors are now awaiting official U.S. government inventory data, scheduled for release later on Wednesday, to confirm the reported drawdown in stockpiles.
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