Bart Melek at TD Securities argues that Strait of Hormuz disruptions have driven Oil inventories to historically low levels, leaving Brent oversold and vulnerable to a sharp short-covering rebound.
OCBC’s FX strategists Sim Moh Siong and Christopher Wong highlight that Brent Oil has dropped sharply on optimism over the reopening of the Strait of Hormuz after a US–Iran deal, but warn markets may be underpricing security risks.
Commerzbank’s commodity team, led by Barbara Lambrecht, warns that recent declines in Oil prices may prove temporary as tanker traffic through the Strait of Hormuz is only gradually recovering and US inventories sit well below seasonal norms.
USD/CAD trades lower around 1.4180 on Friday, down 0.13% at the time of writing, as the US Dollar (USD) weakens following the latest US inflation data.
The Euro (EUR) pares previous weekly losses against the US Dollar (USD) on Friday, favoured by a sharp decline in oil prices and a somewhat softer US Dollar.
Rabobank’s Senior Macro Strategist Bas van Geffen highlights renewed security concerns for Oil as a cargo ship was hit near Oman, raising questions about safety in the Strait of Hormuz. Despite this, Brent trades around $73.8, at the lower end of its weekly range.
Crude Oil prices edge lower on Friday, with the US benchmark West Texas Intermediate (WTI) barrel changing hands at $69.65 at the time of writing. This is the lowest price since February 27, one day before the US and Israel launched a joint attack on Iran.
Danske Research Team notes that Brent Oil initially spiked after reports of an Iranian attack on a cargo ship near Oman and a pause in U.N. escort operations in the Strait of Hormuz.
ING strategists Warren Patterson and Ewa Manthey note that Oil rebounded after a vessel was struck in the Persian Gulf, but they stress that price momentum remains to the downside as flows through the Strait of Hormuz recover.
West Texas Intermediate (WTI) depreciates after registering over 2% gains in the previous day, trading around $70.30 per barrel during the Asian hours on Friday.
USD/CAD loses ground for the second consecutive day, trading around 1.4200 during the Asian hours on Friday. The pair depreciates as the commodity-linked Canadian Dollar (CAD) receives support from higher oil prices.
West Texas Intermediate (WTI) gains ground for the second successive day, trading around $71.50 per barrel during the Asian hours on Friday.
