Snapshot: WTI Crude has plummeted over 4% to trade below $78 per barrel, extending its longest losing streak of the year. This aggressive liquidation is driven by supply-side shifts, specifically expectations of a Friday interim US-Iran agreement in Switzerland that would reopen the Strait of Hormuz and unlock blocked regional flows. This supply normalization offset historical tightness signaled by US Strategic Petroleum Reserves sitting at their lowest levels since 1983, while a slightly softer US Dollar index at 119.51 provides zero support to the collapsing prompt spread.
- The breach of key psychological support at $80.00 accelerates momentum-driven selling, with CFTC positioning showing net longs liquidated by 25,573 contracts to leave specs only modestly long at the 52nd percentile.
- Keep a close eye on any headline leaks regarding shipping security protocols or execution details from the Switzerland talks ahead of the NY cash open, as any hitch in negotiations will trigger a violent short-covering squeeze given depleted inventories.
Bias into NY: We hold a bearish bias targeting $76.50, as physical supply relief from a Hormuz reopening outweighs any broader macro risk-on sentiment.