Oil prices are falling: key factors
29 May 09:36
Oil prices are falling on Friday, May 29, amid expectations of a de-escalation of the Middle East conflict. This is reported by "Komersant Ukrainian", citing Interfax-Ukraine.
As of 8:10 a.m., July Brent futures on the London ICE Futures exchange were trading at $92.56 per barrel, down $1.15 (1.23%) from the previous session’s close. On Thursday, they fell by $0.58 (0.6%) to $93.71 per barrel.
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The trading period for July Brent contracts ends at the close of trading on Friday. The more actively traded August futures are down $0.95 (1.02%) and are trading at $91.75 per barrel.
July WTI crude oil futures on the New York Mercantile Exchange (NYMEX) have fallen by $1.14 (1.28%) to $87.76 per barrel so far today. At the close of the previous session, their price had risen by $0.22 (0.3%) to $88.90 per barrel.
The day before, Axios reported, citing sources, that U.S. and Iranian negotiators had finalized a draft memorandum of understanding on ending the armed conflict and launching negotiations on the nuclear issue, and that the document was awaiting approval by U.S. President Donald Trump.
According to Axios, under the memorandum, shipping in the Strait of Hormuz will be “unrestricted” and free of charge for 60 days. Iran is also required to remove mines from the strait within 30 days.
Later, U.S. Vice President J.D. Vance said that Washington has not yet reached an agreement with Tehran. “We haven’t gotten there yet, but we’re very close, and we intend to continue working on it,” he told reporters.
According to Vance, the parties are currently discussing “drafting details.” “It’s hard to say exactly when the president will sign the memorandum of understanding, or if he will sign it at all. We are discussing several drafting details,” he noted.
IG analyst Tony Sycamore noted that the prevailing view in the market remains that the conflict is over and a deal will be reached soon. According to him, the persistence of this view will contribute to a further decline in oil prices.
The resumption of shipping in the Strait of Hormuz will bring some relief to the oil market, but the timeline for the restoration of full-scale supplies remains uncertain, Sycamore wrote.
“Oil production has fallen significantly since the war began, as producers have curtailed output to address storage constraints,” the expert explained. “Production levels will return gradually.”
Commercial oil inventories in the U.S. fell by 3.327 million barrels last week, the country’s Department of Energy reported yesterday. Commercial gasoline inventories decreased by 2.572 million barrels, and distillate inventories by 2.107 million barrels.
Analysts had forecast, on average, a decline in crude oil inventories of 4.1 million barrels, gasoline stocks of 2.4 million barrels, and distillates of 1 million barrels, according to Trading Economics.
Inventories at the Cushing terminal, where oil traded on the New York Mercantile Exchange (NYMEX) is stored, fell by 2.794 million barrels, the largest drop since August 2023.
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