Crude oil futures were nearly unchanged on Tuesday (May 7), as the US moved to replenish its Strategic Petroleum Reserve (SPR) and the potential ceasefire in Gaza remained uncertain.

The US Department of Energy announced a bid to purchase 3.3 million barrels to help replenish the SPR, which initially pushed oil prices higher before they eventually closed slightly lower.

According to a report from the US Energy Information Administration (EIA), the oil market has become tighter with global reserves decreasing by 300,000 barrels per day since the beginning of the year due to OPEC+ largely adhering to production cuts.

At the close of trading on May 7, WTI crude futures fell 10 cents (or 0.13%) to $78.38 per barrel. Brent crude futures lost 17 cents (or 0.20%) to $83.16 per barrel.

According to the EIA, there remains uncertainty surrounding developments in the Middle East, which could still lead to a significant increase in oil prices.

Oil prices had risen sharply due to geopolitical risks in the Middle East in recent months before declining as no major supply disruptions occurred. WTI and Brent crude have both dropped 7% since their peaks in April 2024 when investors raised prices due to fears of an impending war between Israel and Iran.

Chevron CEO Mike Wirth stated that while oil prices remain relatively stable, there is still a risk of price increases due to the proximity of conflict to the Strait of Hormuz, the most critical global crude oil transit point.

According to the EIA, OPEC+ currently has 4 million barrels per day of spare capacity that could be deployed to address any short-term supply disruptions.

A statement from Netanyahu's office indicated that an Israeli delegation is expected in Cairo to continue ceasefire negotiations "to exhaust all possibilities of reaching an agreement under terms acceptable to Israel."

Tamas Varga, an analyst at PVM, commented: "It is unclear whether a ceasefire agreement will prevent Houthi militant attacks on maritime shipping in the Red Sea, the most significant material risk to oil so far."

Source: Vietstock