Oil prices extended their losses on Wednesday, as the impact of the Iran conflict continued to fade with the resumption of shipping through the Strait of Hormuz, while signs of a supply glut multiplied.
WTI crude fell 1.3%, settling below $69 per barrel, while Brent crude closed near $72 per barrel. The U.S. President noted that American negotiators had made progress in indirect talks with Iran.
Crude futures declined further following the release of the U.S. Energy Department's inventory report. The report indicated that the drawdown in crude stockpiles was about 2 million barrels less than the decline previously forecast by the American Petroleum Institute. However, overall supplies remained well below typical levels. Total U.S. crude inventories are at their lowest since September 2018, following a surge in exports that helped fill the gap from supply disruptions in the Middle East.
Bearish sentiment continues to dominate the market. Brent's nearest-month spread remains in contango, a sign of oversupply, while WTI is also moving closer to signaling an oversupplied market for the first time since November.
Goldman Sachs Group anticipates a supply surplus of nearly 2 million barrels per day next year, even after accounting for the replenishment of global strategic petroleum reserves following the Iran conflict. Morgan Stanley has also warned of an impending supply glut as oil shipments through the Strait of Hormuz recover faster than expected. The bank has lowered its price forecasts twice in about two weeks.
August WTI crude fell 1.3% to settle at $68.58 per barrel.
September Brent crude declined 1.9% to $71.57 per barrel.
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