Oil Markets in Motion
The day opens with May WTI crude oil (CLK24) showing a rise of +0.75 (+0.88%), while May RBOB gasoline (RBK24) is up +2.56 (+0.93%). Crude and gasoline prices are on the upswing, with crude hitting a 5-1/4 month high and gasoline at a 7-month peak. The weaker dollar today lends support to energy prices, with the decision by OPEC+ to maintain crude production cuts till the end of June acting as an additional catalyst for the rise in crude. However, the optimism faltered slightly as EIA crude inventories took an unexpected jump to an 8-month high, pulling back crude prices from their best levels.
OPEC+ Stance
Crude prices found buoyancy in the wake of OPEC+ monthly meeting, which left the existing crude output cuts of about 2 million bpd intact until June. Despite this, the rise in OPEC crude production in March, especially by Iraq and UAE beyond their quotas, poses a bearish undertone for oil prices.
Global Concerns
Oil prices are further underpinned by the looming threat of Iran’s involvement in the Israel-Hamas conflict, following Iran’s vow to retaliate for an Israeli airstrike in Syria. Moreover, the recent Ukrainian drone assaults on Russian refineries, damaging several processing facilities, have stirred the pot further. JPMorgan Chase’s assessment of potential offline Russian refinery capacity from the attacks adding $4 of risk premium to oil prices.
On the date of publication, Rich Asplund held no positions in the securities mentioned in this article. The information provided is for informational purposes only. For more details, refer to the Barchart Disclosure Policy.
Market Dynamics
Crude saw a surge in Chinese demand, with record-breaking crude processing in January and February alongside a spike in Chinese fuel consumption, hinting at a bullish trend in prices. Meanwhile, the ongoing Israel-Hamas conflict and escalating tensions in the Middle East provide long-term support for crude prices.
US Inventory Insights
Today’s EIA report delivered mixed signals with unexpected falls in gasoline and distillate stockpiles, providing some bullish momentum. However, the unexpected rise in EIA crude inventories to an 8-month high countered the positive sentiment somewhat. The report indicated that US crude oil inventories stood below the seasonal 5-year average, with production holding steady below its recent peak.
Rig Counts in Focus
The active US oil rigs showed a slight decline, but remained above the lows registered in November. Despite this drop, the number of US oil rigs has seen a decrease from its peak in December 2022.
The views and opinions expressed in this article solely represent the author’s perspective and do not necessarily align with those of Nasdaq, Inc.
