Oil Prices Exhibit Mixed Movement Amid Uncertainty Over US-Iran Ceasefire Agreement
Oil Prices Settle Mixed Amid Uncertainty Over Iran Ceasefire Deal
New York, May 28 (Reuters) - Oil prices experienced a choppy trading session on Thursday, resulting in a mixed settlement as traders weighed conflicting reports on a potential deal to extend a ceasefire between the U.S. and Iran. Brent crude futures for July closed down 58 cents, or 0.6%, at $93.71 a barrel, while the more actively traded August Brent futures were last trading up by 72 cents at $92.97 as of 3:20 p.m. EDT (1720 GMT).
U.S. oil futures managed to eke out marginal gains to settle up 22 cents, or 0.3%, at $88.90 a barrel. Oil prices have been volatile in recent sessions due to conflicting signals on the possibility of an end to the three-month Iran war and potential re-opening of the Strait of Hormuz. Traffic through the maritime chokepoint remains a small fraction of the pre-war level.
According to four sources familiar with the matter, an agreement had been reached to extend the ceasefire in the Middle East for 60 days. News outlet Axios first reported about the deal on Thursday. However, the agreement still needs U.S. President Donald Trump's approval, sources told Reuters. Iran's Tasnim news agency stated that the text of a potential memorandum of understanding with the U.S. has not yet been finalized or confirmed.
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In early trading, Brent and WTI futures were up more than 2%, following Iran's Revolutionary Guards' announcement that they had targeted a U.S. air base in response to a U.S. attack on the port city of Bandar Abbas. Oil prices were also under pressure from official U.S. data, which showed that the country's crude oil stockpiles fell by 3.3 million barrels last week, a sixth consecutive week of declines but lower than the 4.1-million-barrel draw analysts polled by Reuters expected.
| Source | Expected Draw | Actual Draw |
|---|---|---|
| Analysts (Reuters) | 4.1 million barrels | 3.3 million barrels |
The oil market remains more sensitive to Middle East headlines despite another week of large declines in U.S. stockpiles, according to UBS analyst Giovanni Staunovo.
Investor Takeaway
Oil prices may remain volatile due to uncertainty over the US-Iran ceasefire agreement.
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