Oil Prices Are Crashing. Inventories Tell A Different Story.

AI Summary

Oil prices have sharply declined below $77 per barrel following expectations of a recovery from supply disruptions that has not yet materialized. Brent crude prices fell amid the US and Iran signing a memorandum initiating talks to reopen the Strait of Hormuz and negotiate a broader agreement.

Oil traders have gone from pricing in the worst supply disruption in modern history to pricing in a recovery that hasn't happened yet. Inventory data suggests they’re getting ahead of themselves. Brent crude fell below $77 per barrel on Thursday, the lowest level since the early days of the Middle East war, after the United States and Iran signed a memorandum of understanding aimed at reopening the Strait of Hormuz and launching 60 days of negotiations toward a broader agreement. The market's verdict was immediate: sell first, ask questions…