Thin, holiday-thinned trade left both benchmarks confined to tight ranges, with the market's attention pivoting from supply loss to how much crude will return to circulation now that Strait of Hormuz flows are resuming. Short covering provided the modest lift into the long US weekend, with traders wary of being caught offside on any fresh Doha headlines. The dovish reaction to non-farm payrolls, brought forward a day for the July 4 holiday, barely registered in the energy complex, underlining how dominant the geopolitical narrative has become relative to macro data. Forecast revisions from the sell side point to a market bracing for a near-term surplus even as medium-term price targets remain constructive.
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Oil edged up Thursday on short covering as US-Iran talks in Doha showed progress and Saudi tankers cleared the Strait of Hormuz, though UBS cut its Brent forecasts.
Summary:
- Brent settled around $71.80 a barrel, up 0.32%, while WTI finished around $68.69, up 0.16%, though both hit their lowest levels since before the US-Israeli war on Iran began in late February
- US and Iranian negotiators made positive progress in Doha on issues tied to the memorandum that ended the four-month war, with the next round of talks expected around mid-July
- At least five supertankers carrying a combined 10 million barrels of Saudi crude have cleared the Strait of Hormuz, with Aramco switching to spot pricing to speed Asian sales
- UBS (via Reuters) cut its Brent forecasts sharply, trimming the third-quarter estimate by $25 to around $80, the fourth-quarter view by $10 to around $80, and the 2027 outlook by $10 to around $75
- Nigeria became the first OPEC member to join the International Energy Agency as an associate member, deepening ties between the watchdog and Africa's largest producer
- Ukrainian forces struck the Lukoil refinery in Russia's Nizhny Novgorod region, while US crude stocks fell to their lowest since 2018 and the weekly Baker Hughes rig count rose by seven to 580
Oil prices edged higher on Thursday as short covering lifted both benchmarks ahead of the long US Independence Day weekend, even as the market's focus shifted from potential supply losses to how much Middle East crude will flow back into circulation. Brent futures settled around $71.80 a barrel, up 0.32%, while US West Texas Intermediate finished around $68.69, up 0.16%. During the session both contracts touched their lowest levels since before the US-Israeli war on Iran began in late February, and for the week Brent slipped 0.60% while WTI fell 0.78%.
Mediator Qatar said the US and Iran made positive progress in Doha talks aimed at a permanent peace agreement ending the four-month conflict that had shut the Strait of Hormuz to shipping, according to a Qatar Foreign Ministry statement, with the next round of negotiations expected around the middle of July. At least five supertankers carrying roughly 10 million barrels of Saudi crude loaded from Ras Tanura have already exited the strait, with Saudi Aramco switching to spot pricing to accelerate sales into Asia.
Analysts described a market caught between easing supply fears and a looming glut. Traders noted the debate has moved from how much oil might be lost to how quickly barrels return, while others pointed to a market still absorbing releases from strategic reserves alongside tepid Chinese demand. US crude inventories fell to their lowest since 2018 as refinery runs picked up, and gasoline stocks also declined.
UBS cut its Brent forecasts across the curve, while HSBC argued the market should gradually absorb returning Middle East barrels as the near-term glut fades and strategic stock releases wind down in July, with prices potentially working back toward the $80 mark. Elsewhere, Nigeria became the first OPEC member to join the International Energy Agency as an associate member, and Ukrainian forces struck a Lukoil refinery in Russia's Nizhny Novgorod region. Newsflow is expected to be light on Friday with US markets closed for the holiday.
