Crude Soft as Market Dismisses Threat of US Storms, Middle East Sabre-Rattling

Crude soft. File Image / Pixabay

After a big jump yesterday, Thursday saw the market shrug off more sabre-rattling in the Middle East along with warnings that hurricane season in the US would kick off with "never-before-seen problems".

Both key crude benchmarks fell today; Brent was down 39 cents to $66.61/bbl, and WTI futures fell 23 cents to $60.20/bbl.

The first potential flashpoint of the day can with news that British warship HMS Montrose had to intervene when Iranian vessels tried to intercept a BP tanker in the Strait of Hormuz.

It followed the earlier detention of an Iranian tanker in Gibraltar by the British, and attacks on six other oil tankers in the region that the US has blamed on Iran.

As a result of the latest incident, the UK raised the threat to British shipping in Iranian waters to "critical".

But analysts today were more concerned with the demand picture, while RBC Capital Markets' Helima Croft noted today's market dynamics are simply not what they used to be.

"Five years ago these types of things would have sent oil much higher but now with US production, with concerns about demand, we're not really moving upwards the way we used to based on geopolitics," she told CNBC's Closing Bell.

Meanwhile, the strengthening of Tropical Storm Barry in the US marked the onset of one of the first major storms of hurricane season and with it the potential to disrupt U.S. Gulf Coast production.

Local media noted a key problem is water levels on the Mississippi River are an unprecedented twice as high as usual, leading to fears of widespread flooding.

But again, the news was brushed off by analysts.

"We've priced in a lot of the concerns about the storm and Iran," Phil Flynn, senior market analyst at Price Futures Group Inc, was quoted by Bloomberg as saying.