WTI Slips as Profit-Taking Hits After Hormuz Recovery

Key Moments

WTI trades near $80.50 in early European hours on Friday as recent profit-taking reverses part of the prior sharp rally.
Traffic through the Strait of Hormuz has increased, with 14 commodity vessels transiting on Wednesday compared with single digits last week, according to Kpler.
US crude inventories for the week ending July 24 fell by 7.167 million barrels, far exceeding expectations for a 2.5 million-barrel draw.

WTI Pulls Back Amid Profit-Taking

West Texas Intermediate (WTI), the benchmark for US crude prices, is trading around $80.50 during early European trading on Friday. The contract is under pressure as market participants take profits following a strong advance in the previous session, even as tensions in the Middle East persist.

Strait of Hormuz Sees Higher Vessel Traffic

The recent weakness in prices is occurring alongside signs of improving crude flows through the Strait of Hormuz. Shipping activity in the key chokepoint has increased in recent days, helped by US naval escorts for some tankers across the waterway. Data from Kpler indicate that fourteen commodity vessels crossed the strait on Wednesday, up from single-digit numbers seen last week.

Geopolitical Tensions Provide Supportive Backdrop

Despite the uptick in traffic, ongoing regional hostilities are providing a potential floor for crude prices. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on Thursday that the United States (US) will “pay the price” for killing Iranian civilians, according to the Guardian.

The Islamic Revolutionary Guard Corps (IRGC) stated on Thursday that it had targeted US bases in Kuwait, Jordan and Bahrain after US forces bombed a building on Iran’s Qeshm Island. The IRGC also said that the Strait of Hormuz would remain closed and that the “aggressor will be punished.”

US Crude Stocks Drop More Than Expected

Fresh data on US inventories are also influencing sentiment. Figures from the US Energy Information Administration (EIA) show that crude stockpiles for the week ending July 24 declined by 7.167 million barrels. This compares with a build of 2.011 million barrels in the prior week and a market consensus looking for a draw of 2.5 million barrels.

US Crude Inventory Data	Change (million barrels)
Week ending July 24 (EIA actual)	-7.167
Previous week	+2.011
Market consensus	-2.5

ING Sees OPEC+ Completing Voluntary Cut Unwind

Analysts at ING anticipate that OPEC+ will authorize another supply increase when the group convenes on 2 August, forecasting an additional “188k b/d for September.” According to their assessment, this step “would see the full unwinding of the 1.65m b/d of voluntary cuts announced back in 2023,” effectively bringing to an end the additional reductions that had been implemented.

ING also highlights reports indicating that the producer alliance “will likely pause any further supply increases following the September increase,” suggesting a more cautious approach to adding volumes beyond that point.