WTI Oil hits fresh one-month lows below $86.50 amid US-Iran truce extension

Crude prices trend lower for the third day in a row on Friday, with the US benchmark West Texas Intermediate (WTI) barrel trading around $86.50 at the time of writing after hitting one-month lows a few pips below $86.00. WTI Oil is on track for a nearly 15% decline over the last two weeks.

A moderate risk-relief rally following news that Washington and Tehran have reached a memorandum of understanding to extend the ceasefire for 60 days sent oil prices and the safe-haven US Dollar lower, boosting a moderate rebound on equity markets on Friday.

The agreement, still pending US President Donald Trump’s approval, would allow negotiations on Iran’s nuclear program to continue and would also lift restrictions on sea traffic through the Strait of Hormuz. Investors, however, have taken the news with only lukewarm enthusiasm.

On Thursday, data from the US Energy Information Agency (EIA) revealed that crude Oil inventories declined by 3.327 million barrels in the week of May 22. This is a softer drawdown than the 5 million forecast and less than half the 7.864 million barrels drop seen in the previous week. That said, it makes the fifth consecutive weekly decline and highlights the depletion of US energy stockpiles since the start of the Middle East conflict, keeping Oil prices from depreciating further.