Oil Rises Minimally As Iran/Israel Ceasefire Falls Under Scrutiny

Meanwhile, major U.S. stock draws again suggest demand is healthier than thought: File Image/Pixabay

Cautious optimism about the resiliency of the Iran/Israel ceasefire coupled with signs of strong demand in the U.S. compelled oil traders on Wednesday to cause a mild uptick in prices, following two straight sessions of steep losses.

Although many analysts thought Iran's anaemic response to the U.S. attack against its nuclear facilities was calculated to avoid escalation, questions remained about the true state of Iran's nuclear program - as well as when talks between the Islamic republic and Washington would resume.

Meanwhile, government data showed that American crude inventories dropped by 5.8 million barrels compared with expectations for a 797,000 barrel draw; also, gasoline stocks unexpectedly fell by 2.1 million barrels, compared with forecasts for a 381,000 barrel build.

Capping the good news was gasoline supplied, a proxy for demand: it rose to its highest since December 2021.

All of this on Wednesday resulted in Brent settling up 54 cents at $67.68 per barrel, and West Texas Intermediate settling up 55 cents at $64.92: a modest dent to the losses incurred during the previous two sessions of about 13 percent.

Wednesday's gains were said to have been compromised by Russia claiming it was amenable to another output hike at the next meeting, on July 6, of the Organization of the Petroleum Exporting Countries (OPEC), should the cartel decide an increase is necessary.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, attempted to summarize the state of the market by commenting, "While the second-half outlook still points to a surplus, and bearish sentiment remains, near-term balances look tighter than the broader narrative suggests."

In other oil news on Wednesday, shares of BP temporarily jumped by 7 percent after media reported that Shell is in early stage discussions to acquire the British oil giant; although Shell denied any talks are taking place, the analytical community did not rule out the possibility of such a merger and pointed out it would signal a dramatic consolidation of European oil and gas majors.

Also on Wednesday, trading sources told media that Russia is set to raise the shipments of ESPO Blend crude to China from its port of Kozimo in July; loadings are expected at 4 million tons, up from 3.6 million tons in June.