Oil prices nudge back up a little today but still poised for back-to-back weekly declines
The situation on the Strait of Hormuz agreement remains in limbo, with the shipping lanes reportedly believed to have been agreed in principle between Iran and Oman. However, the final text of the agreement is yet to be approved and it remains to be seen how and when the arrangement can begin. For the time being though, ship traffic along the strait remains at a near total standstill.
Since 3 August, independent ship tracking data is seeing single-digit daily averages of vessels crossing the Strait of Hormuz. The numbers exclude shadow fleet and dark transits but it speaks to the overall situation and how even with much optimism from all the talk by US president Trump, the reality of the situation begs to differ.
This comes after multiple vessels were struck or targeted by projectiles in their attempts to cross, even when using the Omani corridor.
Adding to that now is that Iran is also pushing for a bill to bar US, Israel, and other "hostile" vessels from using the agreed upon transit route with Oman. The bill is said to also include a fine of up 20% of cargo value for unauthorised or non-compliant transits attempting to pass through.
So, are things really better than what they were last week? Or even two weeks ago?
Well, oil prices continue to buy into the headlines from Trump for now still. Despite WTI crude trading up by 1.5% today, it is still poised to end the week lower by nearly 10% with back-to-back weekly declines on the cards.
[WTI crude oil hourly chart ($/bbl)]
The standout point on the chart above is that we have seen back-to-back weeks in which oil prices opened with a significant gap lower and have failed to close that by the end of the week.
The signal there is that traders are siding with optimism rather than focusing on the reality of the situation along the Strait of Hormuz as seen above. It was certainly the case during June as well. But as seen with how quickly things can change in July, it's not farfetched to say that traders are underestimating the risks tied to a prolonged continuation of the status quo.
Looking to the hourly chart above, we can see WTI crude moving back up above the 100-hour moving average (red line) again today. So, that will at least give buyers something to work with to try and make a move towards $80 next.
It all comes down to what happens with US-Iran developments of course. But as much as the US wants to try and sell the story that we are moving closer to the end of the war, the fact of the matter is that things have not changed by much - if at all - since March. And at best, we're circling back to almost similar conditions that were established at the end of June.
The only difference is that we're adding another five weeks of tightening supply to the market, with potential for more delays set to follow. That especially if Iran sticks to the gameplan of making the US run in circles and prolonging the status quo on the Strait of Hormuz.
This article was written by Justin Low at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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