Brent slips on Iran-Israel standoff pause

The front-month ICE Brent contract has declined by $1.51/bbl on the day, to trade at $91.06/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has felt some upward pressure after the American Petroleum Institute (API) reported a substantial decline in US crude stocks.

US crude oil inventories plunged by 9.1 million bbls in the week ending 5 June, according to the API.

Market participants had expected a much smaller draw of 3.4 million bbls.

A decline in US crude stocks indicate tightness in US oil market and may put some upward pressure on Brent's price.

“The latest data from the American Petroleum Institute (API) continues to show a tightening in the US oil market,” two analysts from ING Bank noted.

Downward pressure:

Brent’s price has declined, following news that Israel and Iran have agreed to stop the fire exchange for the time being.

Israeli Prime Minister Benjamin Netanyahu said the Israel Defense Forces (IDF) will refrain from attacking Iranian sites “for now.”

The news has renewed hopes of a broader ceasefire deal between the US and Iran – a move that could eventually reopen the Strait of Hormuz to commercial vessel traffic.

“This weakness [in Brent’s price] came amid renewed hopes of an imminent deal between the US and Iran, following both Israel and Iran calling an end to the strikes over the weekend,” ING Bank’s analysts said.

The latest data coming out of China has put additional downward pressure on Brent’s price today.

China’s total oil imports declined by 3.2 million b/d year-on-year in May to about 7.8 million b/d, Bloomberg reported, citing Chinese customs data. It marked the “lowest level since October 2017,” according to ING Bank’s analysts.

By Aparupa Mazumder

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