Crude futures fell as signs of a thaw in US relations with sanctioned oil producers Iran and Venezuela undercut expectations of tightening global supplies.
(Bloomberg) — Crude futures fell as signs of a thaw in US relations with sanctioned oil producers Iran and Venezuela undercut expectations of tightening global supplies.
West Texas Intermediate fell below $79 to the lowest closing price in more than a month. The Biden administration is in talks with Venezuela to explore easing sanctions that have hindered its oil sales if the country holds cleaner elections. Meanwhile, observed exports from Iran have surged this month as back-door diplomatic efforts with the US appear to be easing pressure on the Middle Eastern nation.
Capping crude’s losses was a bullish stockpile report showing that supplies remain tight despite concerns about a potential slowdown in demand. US inventories dwindled to the lowest since December 2022 while stockpiles in the nation’s biggest storage hub in Cushing, Oklahoma, slid the most since October 2021.Â
Read more: Oil Stockpiles Slump From Low Levels as OPEC+ Cuts, Demand Bite
Crude’s rally since late June has faltered over the last couple of sessions amid the worsening outlook in China and signs the Federal Reserve isn’t yet done with its campaign of monetary tightening. Evidence of a hastening downturn in the euro area added to wider worries about economic growth on Wednesday.
The macro headwinds have overshadowed a tightening market following supply cuts by OPEC+ kingpins Saudi Arabia and Russia. Meanwhile, Turkey and Iraq have held a flurry of talks as they seek to restart a major oil pipeline, though they have failed to reach a breakthrough so far.
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