Oil prices extended declines on Thursday, with Brent crude and West Texas Intermediate both falling for consecutive sessions as expectations grew that Middle East supply disruptions may ease.
Brent crude futures dropped 60 cents, or 0.7%, to $87.24 a barrel by 0004 GMT, marking a fourth straight daily decline. WTI crude futures fell 56 cents, or 0.7%, to $81.67, extending a five-day losing streak. The declines follow reports that Qatar’s prime minister was en route to Iran for talks aimed at stabilizing regional energy flows.
The Strait of Hormuz, a critical chokepoint for global oil and gas shipments, has seen traffic reduced to roughly one-quarter of its pre-war levels since the U.S.-Israeli conflict with Iran began in late February. Before the conflict, the strait carried volumes equivalent to about one-fifth of global consumption. While a temporary ceasefire agreed in June later collapsed, recent diplomatic efforts have raised hopes of renewed stability. The U.S. had paused its military actions against Iran for about a month prior to the report.
U.S. distillate stockpiles, which include diesel and heating oil, fell by 2.2 million barrels in the week ending August 21 to 103.4 million barrels, according to Energy Information Administration data. Daniel Hynes, senior commodity strategist at ANZ, noted that this marks the lowest distillate stockpile level ever recorded for that time of year. Hynes added that while crude oil edged lower on improving prospects for the Strait of Hormuz reopening, "concerns over shortages in the oil market persist."
