Snapshot: Brent crude has plunged below the $78 per barrel threshold, marking its lowest level since early March as supply risk premiums evaporate following an interim US-Iran agreement to reopen the Strait of Hormuz. While the prospective return of millions of barrels of offline OPEC output dominates price action, today’s session will also digest yesterday’s FOMC policy update ahead of the 08:30 ET US economic data.
- Physical market indicators show extremely tight prompt pricing, with US Strategic Petroleum Reserve stocks at their lowest level since 1983 and Cushing inventories depleted to 20 million barrels.
- The key risk for the NY session is the actual flow rate of shipping through the Gulf; any signs of friction or delayed tanker departures will clash with heavily short-skewed positioning.
Bias into NY: We hold a bearish bias targeting $76.20, as the massive supply-side resolution of the Hormuz blockade overpowers the supportive tailwinds of yesterday’s dovish FOMC projections and a weaker US broad dollar index at 119.50.