After a period of speculative surge driven by heightened tensions between Israel and Iran, oil prices have begun to retreat as Israel refrains from retaliatory measures. The market anticipates that Israel’s response will be restrained, potentially halting further escalation in the region.
Factors Influencing Oil Prices:
- The Energy Information Administration (EIA) reported a surge in US oil stocks to a 10-month high, surpassing market expectations.
- Ukrainian drone attacks on Russian refineries have bolstered global oil supplies while reducing fuel production within Russia. This surge in exports from Russia, nearly reaching 4 million barrels per day, has led to a $2.15 billion increase in the gross value of exported oil for the week.
Market Performance
June Brent oil futures on the London ICE Futures exchange experienced a 3% decline to $87.3 per barrel, with May WTI oil futures on the New York Mercantile Exchange NYMEX falling by 3.3% to $82.7 per barrel.
- US crude oil inventories surged by 2.74 million barrels to a 10-month high as of April 12, surpassing analyst expectations.
Global Demand Concerns
- A decline in oil demand from India, the world’s third-largest consumer, further exacerbated downward pressure on global oil prices. India reduced oil demand by 0.6% to 21.09 million tons in March.
Additional Insights
- The volume of oil stored on tankers parked for at least a week increased by 11% to 78.8 million barrels as of April 12, adding further pressure on oil prices.
- June palm oil futures on Bursa Malaysia plummeted by 6.7% to a 6-week low of 4,012 ringgit per ton, or $836 per ton.
- Quotations for soy and palm oil experienced a 1.2% decline on the Dalian stock exchange.
Future Outlook
Expectations of reduced global demand, driven by economic slowdowns in China and the US, are anticipated to continue exerting downward pressure on oil prices. However, the potential for escalation in the Middle East, favoring the Russian Federation, could trigger speculative growth in oil prices.