Oil Traders Reprice Hormuz Risk as Demand Outlook Deteriorates
September WTI crude oil futures are trading at $81.19 late Thursday, up $4.11, or 5.33%, for the week. With Friday’s session still to come, the final weekly result remains unsettled. The message is clear. Traders spent the week rebuilding the Hormuz premium after last week’s deal optimism fell apart, then had to deal with an inventory report and demand forecasts that argued crude had moved too…
Oil traders are reevaluating the risk associated with the Strait of Hormuz as the demand outlook for crude worsens. WTI crude oil futures surged to $81.19, up 5.33% for the week, following Iran's failure to agree to reopen the strategic waterway. Traders had anticipated an opening of the Strait, but Iran maintained its conditions and the United States raised its own demands.
The inventory report showed a 17.4 million barrel increase, while OPEC and the IEA reduced demand forecasts. Despite the rally, WTI is still not trading near its high and the restricted supply and challenging demand side may prevent another move toward the mid-80s.
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