-- Crude oil futures slipped in midday trading on Wednesday as a two-week ceasefire between the US and Iran eased immediate fears of supply disruption and boosted hopes of reopening the Strait of Hormuz.
Front-month West Texas Intermediate crude futures fell 15.81% to $95.81 per barrel, while Brent futures were down by 12.89% to $95.22/bbl.
US crude stockpiles rose by 3.1 million barrels to 464.7 mmbbls in the week ended Apr. 3, the Energy Information Administration said in its weekly report on Wednesday. Crude inventories are now about 2% above the five-year average for this time of year.
On Wednesday, President Trump said he had agreed to suspend planned attacks on Iranian infrastructure for two weeks, subject to Tehran agreeing to a "complete, immediate, and safe" passage via the Strait of Hormuz.
"Further price direction will hinge on whether talks translate into a durable agreement and a sustained normalization of flows through the strait, with volatility likely to persist during negotiations later this week," ING strategists said.
However, mixed signals have emerged on vessels transiting the strait.
According to ship-tracking firms, overall traffic through the Strait has not picked up 12 hours into the ceasefire, amid doubts about the shape of a final peace agreement. Two ships have passed through the Strait of Hormuz since Iran agreed to reopen the waterway as part of a ceasefire deal, according to Marine Traffic.
On Wednesday, Iran closed the Hormuz and fired dozens of missiles across the Arabian Gulf in response to strikes at its Lavan oil refinery and Israeli attacks on Lebanon.
Iran's Foreign Minister, Seyed Abbas Aragchi, said that if attacks against his country stop, Tehran would cease counter-attacks and provide safe passage in coordination with its armed forces, "and with due consideration of technical limitations."
During a press briefing on Wednesday, White House Press Secretary Karoline Leavitt, however, maintained that an uptick in vessel traffic has been observed and that the US is continuously monitoring the strait.
Though the ceasefire creates a window for transit via the strategic waterway, flows remain conditional and operationally constrained.
Kpler strategists said that 172 million barrels of crude and products are still on the water in the Arabian Gulf, spread across about 187 laden tankers.
The analysts said three-quarters of the volume is crude and condensate, heavily concentrated on VLCCs and dominated by medium- and heavy-sour grades from Saudi Arabia, Iraq and the UAE.