Oil Futures Fall to Lowest Since the Outbreak of War

1456 ET – Oil futures fall to their lowest level since the start of the U.S.-Iran conflict as more oil shipments make it out of the Persian Gulf. Signs are that production and exports will return much faster than had been thought during the war, Mizuho’s Robert Yawger says in a note. “Once storage draws down, oil producers can ramp up production and return to business as usual” as long as the U.S. and Iran reach an agreement in the 60-day negotiation period that keeps Strait of Hormuz open. Yawger expects the Trump administration would extend the negotiating period rather than go back on the offensive in mid-August, “just two-and-a-half months away from the mid-term elections, where affordability will be a major issue.” WTI settles down 3.9% at $70.34 a barrel and front-month Brent falls 4.3% to $73.74. (anthony.harrup@wsj.com)

Oil Market Shrugs Off Large U.S. Crude Stock Draw

1219 ET – Oil futures are falling as euphoria over the return of ships through the Strait of Hormuz outweighs concerns about falling U.S. inventories. The EIA reported a larger-than-expected 6.1 million barrel drop in commercial crude stocks for last week, a ninth straight draw. “Short-term we have major drawdowns in inventories, there’s a lot of disruption in the market, and the exact short-term trajectory is difficult to see,” says TradeStation’s David Russell. But the intermediate to long-term outlook is more bearish for prices than the market seems to appreciate with OPEC lifting production and Venezuela’s return to the market, he says. “There’s a flood of oil that’s coming and everybody knows it.” WTI is off 3.8% and most active Brent is down 3.5%. (anthony.harrup@wsj.com)