Snapshot: Brent crude has plummeted below $78 per barrel, hitting its lowest level since early March as physical supply risks dissolve following a breakthrough interim US-Iran agreement to reopen the Strait of Hormuz. This massive supply normalization completely overrides yesterday’s FOMC economic projections, with traders now pivoting to the demand-side implications of today’s 08:30 ET US economic releases.
- The resumption of shipping through the Persian Gulf threatens to rapidly unlock millions of barrels of sidelined Saudi, UAE, and Iraqi capacity, though downside is partially cushioned by tight domestic stockpiles, with Cushing at 20 million barrels and the US Strategic Petroleum Reserve at its lowest since 1983.
- Technical momentum is heavily bearish following a 38% decline from the April peak, meaning any weakness in the 08:30 ET Philly Fed manufacturing or jobless claims data will likely accelerate the spot sell-off.
Bias into NY: We are structurally bearish into the New York open, targeting a break toward $76.20 as physical Gulf flows resume, with a softer US broad dollar index of 119.5073 offering only minor, secondary support to the contract.