Oil prices settle in mixed direction on conflicting reports of US-Iran ceasefire deal
By Shariq Khan
Oil Market Reacts to US-Iran Ceasefire Developments
NEW YORK, May 28 (Reuters) - Oil prices settled mixed on Thursday after a choppy trading session, as traders mulled conflicting reports of progress on a potential deal to extend a ceasefire between the U.S. and Iran.
Brent and U.S. Oil Futures Performance
Brent crude futures for July, which expire on Friday's settlement, closed down 58 cents, or 0.6%, at $93.71 a barrel. The more actively traded August Brent futures were last trading up by 72 cents at $92.97 as of 3:20 p.m. EDT (1720 GMT).
U.S. oil futures eked out marginal gains to settle up 22 cents, or 0.3%, at $88.90 a barrel.
Recent Volatility and Strait of Hormuz Concerns
Oil prices have been volatile in recent sessions on conflicting signals on the possibility of an end to the three-month Iran war and potential re-opening of the Strait of Hormuz. Traffic through the maritime chokepoint remains a small fraction of the pre-war level.
Ceasefire Extension Reports and Market Impact
An agreement had been reached to extend the ceasefire in the Middle East for 60 days, four sources familiar with the matter told Reuters. News outlet Axios first reported about the deal on Thursday.
Pending Approval and Conflicting Statements
The agreement still needs U.S. President Donald Trump's approval, sources told Reuters. Iran's Tasnim news agency, meanwhile, said the text of a potential memorandum of understanding with the U.S. has not yet been finalized or confirmed.
Early Trading Influences
In early trading, Brent and WTI futures were up more than 2%, after Iran's Revolutionary Guards said they had targeted a U.S. air base in response to a U.S. attack on the port city of Bandar Abbas.
Analyst and Market Commentary
"The complex continues to advance grudgingly on bullish developments out of Iran while plunging markedly on even the slightest suggestion of a reopening of the Strait of Hormuz," oil trading advisory firm Ritterbusch and Associates said.
"This contrast in responses to bullish and bearish inputs could continue as long as the ceasefire remains intact."
U.S. Stockpile Data and Market Sensitivity
Oil prices were also under pressure from official U.S. data that showed the country's crude oil stockpiles fell by 3.3 million barrels last week, a sixth consecutive week of declines but lower than the 4.1-million-barrel draw analysts polled by Reuters expected. [EIA/S]
U.S. gasoline and distillate fuel stockpiles also fell.
Middle East Headlines Remain Key Driver
The oil market remains more sensitive to Middle East headlines despite another week of large declines in U.S. stockpiles, UBS analyst Giovanni Staunovo said.
(Reporting by Shariq Khan and Nicole Jao in New York, Georgina McCartney in Houston, Seher Dareen in London, Sam Li in Beijing and Florence Tan in Singapore; Editing by Mark Potter, Hugh Lawson, Paul Simao, Barbara Lewis and David Gregorio)
