The Iran walk-out of war negotiations and the ongoing fighting in Lebanon haven’t derailed the oil selloff.
Vance brushed aside ceasefire violations and Iran’s negotiators did agree to steps towards a lasting deal. All sides seem to be saying the right things in between threats to go back to war. With that, an early rise in crude to as high as $78.96 has quickly reversed and it now trades at $74.81.
The focus now is Friday’s intraday low of $73.58 and a break would be the lowest since early March. In effect, the war rally in oil has been wiped out, which is a truly remarkable result given that massive amount of oil that was removed for 100 days (and counting). There is an increasing realization that the swing factors have been: 1) Reserve releases from the US, Japan and others 2) China lowering imports by 4 million barrels per day, and using its supplies instead 3) Commercial inventories sold down on the belief/expectation the war would end The risk is that all those go into reverse as the war ends.