Oil extended its slide for a third straight session as optimism grew that the U.S., Iran and Oman are nearing an interim deal to reopen the Strait of Hormuz, a corridor that carries about one-fifth of global oil and liquefied natural gas shipments. West Texas Intermediate slipped toward $75 a barrel even as another commercial vessel came under attack near the strait and U.S. crude inventories rose against expectations for a draw.
West Texas Intermediate crude slipped 0.7% to $75.27 a barrel on Wednesday. Brent crude fell 0.5% to $79.00 a barrel over the same stretch, as of 02:56 ET. Both benchmarks had tumbled more than 5% on Tuesday, extending losses from Monday, as optimism grew that Washington and Tehran could reach an interim agreement to restore shipping through the Strait of Hormuz.
Diplomatic push to reopen Hormuz gains steam
The U.S., Iran and Oman are nearing an interim agreement to reopen the strait, with Washington aiming to announce the deal on Wednesday, Axios reported Tuesday evening. Iranian media reports, however, said Tehran would delay any agreement as long as U.S. threats continue. Qatar said Tuesday that an interim proposal had been drafted as mediators worked to narrow differences between Washington and Tehran.
President Trump discussed de-escalation with Qatar's Emir Sheikh Tamim bin Hamad Al-Thani in a phone call Tuesday. President Trump said talks with Iran had begun and suggested Tehran had a "last chance" to reach an agreement. Iran, however, has publicly denied that formal negotiations were taking place.
Security risks persist despite naval escort
Despite the improving diplomatic signals, another commercial vessel came under attack near the Strait of Hormuz on Tuesday. Separately, two tankers transited the strait overnight with a U.S. Navy escort along the Omani corridor, according to social media reports, though CENTCOM has denied a full resumption of escort operations. The odds that Hormuz traffic returns to normal by September 30 have risen to 30.5%, up from 22% a day earlier, according to a prediction market tracked by Crypto Briefing.
API data shows a build in crude inventories
The American Petroleum Institute said U.S. crude oil inventories rose 2.69 million barrels in the week ended July 31, compared with analysts' expectations for a draw of about 2 million barrels. The market now awaits official Energy Information Administration data due later Wednesday to confirm the trend.
Technical setup: WTI tests key Fibonacci support
WTI has fallen more than 13% from recent highs and is testing $74.76 Fibonacci support on the five-hour chart, following a drop from the $84-$87 area, according to Investing.com's technical analysis. The 200-period moving average near $77.81 has flipped into resistance. Meanwhile, the RSI near 34.72 is approaching oversold territory. A close below $74.76 could open the way to a deeper correction, though signs of seller exhaustion suggest a bounce is possible.
Sources: Commodities & Futures News, Crypto Briefing, Commodities & Futures News
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