Oil Rally Falters as EIA Inventory Report Highlights Continuing Hormuz Disruptions
The recent rally in crude oil prices faces a test as the latest EIA inventory report is released, amidst ongoing restrictions on traffic through the Strait of Hormuz.
A build of 9.1 million barrels by the American Petroleum Institute (API) has given sellers a reason to challenge resistance levels for WTI and Brent, potentially dampening the rally.
The Hormuz traffic remains restricted, with only eight vessels passing through the strait, significantly below pre-war levels, keeping the oil supply premium in place. The market had previously priced in a deal that would ease these restrictions, but both Iran and the US have instead raised their demands over the past 48 hours.
The physical evidence of this stalemate was seen on Tuesday, when vessel traffic hit a one-week low, indicating that the rally's risk premium has been given back as the framework for a deal never materialized into a shipping agreement. The disruption behind the price increase remains without a timeline for resolution.