Oil Prices Rise Slightly as Peace Efforts Continue, oil is marking the smallest weekly gains in months
Oil prices edged higher on Friday ahead of the long US holiday weekend, as cautious optimism persists regarding efforts to achieve peace in the Middle East between the U.S. and Iran.
Brent futures rose 46 cents, or 0.64%, to $72.26 a barrel as of 04:07 GMT. WTI rose 32 cents, or 0.47%, to $69.01 a barrel.
U.S. markets will be closed on Friday ahead of the US Independence Day holiday on Saturday.
In the previous session, both indicators reached their lowest levels since the start of the U.S.-Israel-Iran war in late February. Brent rose 0.35% weekly, and WTI rose 0.43%, marking the smallest weekly gains for both in months.
The market wants to believe that peace efforts will bear fruit, but remains cautious until it sees concrete evidence of a return to normalcy in the Strait of Hormuz.
Following the exchange of attacks between Iran and the US last weekend after Iran attacked a cargo ship, shipping through the Strait of Hormuz has partially resumed, as stipulated in the initial agreement between Iran and the US.
Gulf producers are working to increase their production in the hope of reopening the Strait of Hormuz, which, before the war, carried a fifth of the world's daily supply of oil and liquefied natural gas.
According to sources, Kuwait's oil production has sharply increased from 580,000 barrels/day in May to 1.65 million barrels/day in June, as it increased its exports following the US-Iran interim peace agreement.
Furthermore, according to trade sources and shipping data, at least five supertankers carrying a total of 10 million barrels of Saudi oil have left the Strait of Hormuz, and Saudi Aramco has switched to spot pricing to accelerate sales in Asia.
With increasing supply pressure, the spread between the nearest-dated Brent crude and one-month futures turned negative on June 24th, while the six-month spread also turned negative on Thursday. When this spread is negative, the market is in a state of contango.
This return to supply coincides with the sustained release of the US Strategic Petroleum Reserve (SPR).
With the futures curve moving towards contango, we may begin to see more buying in the market.
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