WTI falls below $93.50 on hopes of strait of Hormuz reopening

• WTI price falls to near $93.25 in Thursday’s early Asian session. 
• The prospect of reopening the vital Strait of Hormuz weighs on the WTI price. 
• US crude oil inventories fell by 2.3M barrels last week, said EIA.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $93.25 during the early Asian trading hours on Thursday. The WTI price declines on optimism over a possible deal to end the war with Iran. 

The US and Iran are working on a preliminary framework for a deal aimed at ending the war and laying the groundwork for broader nuclear negotiations, per Bloomberg. US President Donald Trump stated that the US has had “very good talks” with Iran over the past 24 hours, but there’s no deadline for when he expects to hear back from Tehran.

A potential agreement with Iran to end the ongoing conflict and reopen the Strait of Hormuz, a key global oil shipping route, further boosted hopes of improved supply flows, undermining the WTI price. 

US crude oil inventories continue to fall. According to the Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending May 1 declined by 2.314 million barrels, compared to a fall of 6.233 million barrels in the previous week. The market consensus was for a decrease of 2.8  million barrels.

Goldman Sachs analysts reported that global oil inventories are approaching their lowest level in the last eight years, warning that the rapid reduction in reserves is becoming a critical factor against the backdrop of limited supplies.