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by Stockwatch Business Reporter

West Texas Intermediate crude for August delivery added 26 cents to $79.60, while Brent for September added 22 cents to $84.95 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.70 to WTI, up from a discount of $15.30. Natural gas for August added two cents to $2.92. The TSX energy index lost 1.81 points to close at 400.98.

Oil prices took a breather despite intensifying fighting in the Middle East, as the United States and Iran exchanged fresh blows in a bid to tighten control over the Strait of Hormuz. Iran has also begun threatening to disrupt other oil and gas export routes across the region. Goldman Sachs, noting that Gulf exports are back below 50 per cent of prewar levels (after recovering to 80 per cent following June's preliminary truce), estimated that Brent could surpass $110 (U.S.) in the fourth quarter if the recovery continues to stall.

Meanwhile, in its latest weekly data release, the U.S. Energy Information Administration (EIA) reported that U.S. commercial crude inventories fell by 1.7 million barrels last week, their 12th decline in 13 weeks. In a separate report, the EIA noted that at the start of the second quarter, commercial inventories were higher than the five-year seasonal average, but by the end of the quarter, they were at their lowest seasonal level since 2014. (They are currently about 6 per cent below the five-year seasonal average.) Commercial inventories exclude the Strategic Petroleum Reserve (SPR), which fell by three million barrels last week, bringing its drawdowns to 98.9 million since the start of the U.S.-Iran war in February. The SPR now sits at 316.5 million barrels, the lowest since April, 1983.

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