futures traded lower on Friday morning following reports that the US and Iran have agreed to extend the ceasefire by 60 days, though there was no confirmation on this from US President Donald Trump or Iranian authorities.
At 10.03 am on Friday, August Brent oil futures were at $91.75, down by 1.02 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $87.79, down by 1.25 per cent. June crude oil futures were trading at ₹8406 on during the initial hour of trading on Friday against the previous close of ₹8537, down by 1.53 per cent, and July futures were trading at ₹8262 against the previous close of ₹8378, down by 1.38 per cent.
Speaking to reporters in Washington, US Vice President JD Vance said there were a few points in talks with Iran regarding its enriched uranium stockpile and the question of enrichment. “I can’t guarantee that we’re going to get there, but right now I feel pretty good about it,” he said.
In their Commodities Feed for Friday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said the oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal. Reports suggest that both sides reached a memorandum of understanding (MoU) that would extend the ceasefire by 60 days and reopen the Strait of Hormuz. Yet this still needs to be signed off on by Trump.
They said a reopening of the strait would offer some immediate relief to the oil market with tankers leaving the Persian Gulf. However, the recovery is still uncertain. Firstly, shipowners could be reluctant to send vessels into the Persian Gulf initially, with fears that the ceasefire could break down, potentially trapping vessels once again in the Gulf. Secondly, upstream oil production has fallen significantly since the war, with producers shutting in production in order to manage storage constraints. They said that the recovery in upstream production will be gradual rather than immediate.
Stating that the market has increasingly priced in a resolution this week, they said any confirmation of a deal that reopens the strait means that significant further downside is likely limited, particularly during the early stages of a ceasefire.
“The market is more vulnerable now than it was pre-war, given the significant inventory drawdowns we have seen over the last three months. A tighter market means that prices are likely to remain volatile. A slow recovery in supply means that the oil market is unlikely to return to surplus anytime soon,” they added.
Meanwhile, the weekly petroleum status report by the US EIA (Energy Information Administration) for the week ending May 22 indicated a decrease in US crude oil inventories. According to EIA, US commercial crude oil inventories decreased by 7.9 million barrels for the week ending May 22. At 445 million barrels, US crude oil inventories were about 2 per cent below the five-year average for this time of year.
Total motor gasoline inventories decreased by 1.5 million barrels from last week and were 5 per cent below the five-year average for this time of year. Distillate fuel inventories increased by 0.4 million barrels last week and were about 9 per cent below the five-year average for this time of year.
Total products supplied in the US over the last four-week period averaged 20.2 million barrels per day, up by 3.1 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.9 million barrels per day, up by 0.5 per cent from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels per day over the past four weeks, up by 1.4 per cent from the same period last year. Jet fuel product supplied was up 1 per cent compared with the same four-week period last year.
June natural gas futures were trading at ₹316.80 on MCX during the initial hour of trading on Friday against the previous close of ₹313.90, up by 0.92 per cent.
On the , June guargum contracts were trading at ₹11480 in the initial hour of trading on Friday against the previous close of ₹11385, up by 0.83 per cent.
June turmeric (farmer polished) futures were trading at ₹16300 on NCDEX in the initial hour of trading on Friday against the previous close of ₹16216, up by 0.52 per cent.