- WTI trades with a negative bias for the third straight day, though it lacks follow-through.
- Hopes for easing US-Iran tensions turn out to be a key factor weighing on the commodity.
- Hormuz risks hold back bearish traders from placing aggressive bets and help limit losses.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – struggles to capitalize on the previous day’s goodish rebound from sub-$85.00 levels, or over a three-week low, and remains depressed for the third straight day on Thursday. The commodity trades just below the $88.00 mark during the Asian session, down around 0.40% for the day, amid hopes of a prolonged US-Iran ceasefire.
US President Donald Trump said that he believes the war with Iran may be coming to a conclusion soon, while the White House expressed optimism about reaching a deal to end the conflict. Furthermore, reports suggest that there are growing prospects for a second round of peace talks between the US and Iran that could take place in a matter of days. The optimism, in turn, is seen as a key factor that continues to undermine Crude Oil prices.
Meanwhile, Iran has demanded an end to Israeli attacks on Lebanon as a precondition for further negotiations with the US. The Israeli Prime Minister, Benjamin Netanyahu, indicated that he had not committed to a ceasefire and said that he had given instructions to the IDF to continue thickening the security zone. This, along with the instability in the Strait of Hormuz, acts as a tailwind for Crude Oil prices and limits the downside.
The US naval blockade of Iranian ports, imposed after the end of the Islamabad talks last Saturday, had been fully implemented. The leader of Iran’s joint military command said on Wednesday that its military could halt trade in the Gulf region if the US did not lift its blockade on Iranian ports. This raises the risk of global supply disruptions and, in turn, is holding back bearish traders from placing aggressive bets on Crude Oil prices.
