Review Of Oil Trading Markets - 2024 - 8th to 12th April

Crude Oil prices remained rock steady this week, the only stray cat being ICE gas oil which seems stuck in its own alley moving around at will rather than joining the general trend and price flow.

The whole week was built on fears of a much touted missile attack by Iran on Israel and those fears really ate into crude oil prices more than petroleum products which are beginning to feel a little detached from ICE Brent prices. Worth noting that the first commodity to react to a drama will always be Crude oil!

The attack warning initially came from the United States and Russia that such a dramatic act was in the pipeline and hung around all week, but as the week wore on and nothing happened crude oil prices paddled nervously awaiting the next chunk of dramatic breaking news. Comes Friday evening oil?prices dithered into the close but held the line as investors mulled which way to turn all the time debating what such an unprecedented act, should it happen, could mean for oil prices and would such an event follow trend and take place over a weekend.

Late on Saturday night the attack became a reality.

At 10.04 pm London time, U.S., Israeli and Iranian news services reported at least 100 drones and cruise missiles (by the end of the night reports suggest the total was nearer 300) had been launched by the Iranian Revolutionary guard under an operation codenamed “True Promise” intended to hit Israeli government buildings and military targets. The?Iranian National Guard quickly admitted responsibility for the launch and described ?the operation as “punishment for Israeli war crimes”. Some of the missiles were shot down en route over Syria and Jordan according to Israeli channel 12 television whilst many others continued on their dreadful journey.

As night became day and dawn broke on Sunday, reports suggest many of the drones and missiles have been intercepted and destroyed by Israeli forces before they could hit their intended target.

Bloomberg suggests the U.S. shot down some of the Iranian hardware.

This will remain a developing story during the coming days, the big question now enveloping the oil markets is how will prices react and where will markets open on Monday morning?

The reason and?catalyst behind the Iranian attack is the aftermath of an airstrike on April 1, with Israel being accused by Iran of targeting an Iranian consulate building in Damascus, Syria. The strike resulted in the deaths of several high-ranking Islamic Revolutionary Guard Corps commanders, including two generals. Iran views this attack as a direct provocation.

Israel, had already been on high alert due to multiple threats and intelligence assessments pointing to an imminent Iranian strike which has now happened. The spectre of conflict between these two regional adversaries has escalated concerns yet again over lack of stability in the Middle East and its implications for global energy markets.

Whilst the attack appears to have been thwarted the distant prospect of Iran attempting to close the vital Straits of Hormuz waterway through which most Middle East oil cargoes travel to the West and East will remain at the forefront of traders thinking.

However, Iran has subsequently announced the operation is now concluded.

Whichever way you cut it lower oil prices over the coming weeks will seem a fair way back in the rear view mirror!

In other news….

Other news (which given the Iranian actions will be somewhat irrelevant for oil prices in the coming days….but here goes anyway!!)

Bloomberg reports that increased Chinese crude oil demand (which boosted oil prices a week or so ago) was only a feature of stocking up due to heavily discounted offers of Russian crude oil. The background to the theory is as follows….

Chinese imports of crude oil fell in March by 6% compared to the same month last year. First quarter?crude imports remain stable year on year amid high volumes of Russian crude flowing to China. China imported 49.05 million metric tons of crude oil last month, which is equal to around 11.55 million barrels per day (bpd), per data from the Chinese General Administration of Customs cited by Reuters. Let’s remember at it’s height China imported well over 13 million barrels a day of crude oil with the occasional run towards 15 million barrels a day, so the current 11.55 looks pretty low key.?While lower by 6.2% compared to the March 2023 volumes of over 12 million bpd – when China was recovering from the eased Covid-related restrictions, imports last month were higher than the January-February average of 2023 an 0.7% increase in Chinese crude imports in January to March 2024.

However, the?slight increase in Chinese crude imports in the first quarter shouldn’t be viewed as a sign that China’s inconsistent economic performance over the past year is over.?In fact, much of the increase in Chinese crude oil imports in recent weeks has undoubtedly been due to super cheap abundant flows of Russian crude, which, hampered en route to India by the U.S. sanctions, has found a home in the world’s top crude oil importer, analysts say.

All in all we are in a market where we are constantly waiting for something to happen…. whether it be an OPEC meeting, an?Israel and Hamas peace agreement, China’s latest economic data to be published, whether Ukraine can hold back an imminent Russian push to win the war and whether Iran would step from the shadows and act alone in an attack on it’s enemies rather than using the cover of Hamas and Hezbollah.?

Well, Iran stepped out and it would appear have been largely unsuccessful with operation “True Promise”. The question now is what $ price and economic hardship will they have to pay for their actions ?

This week’s closing guide prices:

ICE Brent 90.45 (+0.84)

WTI 85.66 (+0.19)

ICE gas oil 839.50 (-10.50)

Euro Mogas swaps 949.50 (+20.50)

Euro Naphtha swaps 688.50 (1.25)

Nymex gasoline 2.8029 (+5.35 cents/usg)

LPG swaps 512.00 (-19.50)

Opec basket 90.62

Credit - Robert Haynes - Silvergreen Energy