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OIL FUTURES: Prices climb as Trump threatens Iranian warships
23rd April 2020 02:02 GMT

 

Oil futures settled higher Wednesday on new that US President Donald Trump threatened to take military action against Iranian warships, and on an uptick in refined product demand.

NYMEX June crude futures settled $2.21 higher at $13.78/b, while ICE June Brent futures settled at $20.37/b, up $1.04.

In refined products, NYMEX May RBOB settled 12.81 cents higher at 63.84 cents/gal, while May ULSD settled 42 points higher at 73.11 cents/gal.

Oil prices were trading higher early in the day after Trump threatened to action against Iranian warships in the Persian Gulf.

"I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea," Trump tweeted.

Last week, US Navy and Iranian Islamic Revolutionary Guard Corps vessels came into close proximity during an incident near the Strait of Hormuz.

“President Trump continues to be active in trying to tweet oil prices higher,” said OANDA analyst Edward Moya.

However, crude remains glutted, and storage is filling, leaving prices vulnerable to the downside.

“Oil will continue to remain heavy on demand fears and will shrug off his latest tweets about filling up the SPR without congressional approval, funding US oil and gas companies, and threats to shoot down any Iranian gunboats that pose a threat,” Moya said.

Oil prices were also supported after US Energy Information Administration data showed an uptick in US refined product demand.

Total US product supplied climbed 306,000 b/d to 14.10 million b/d during the week ended April 17, EIA data showed Wednesday. The increase snapped six consecutive weeks of falls in which demand plummeted 37% from early March.

Gasoline demand was up 230,000 b/d at 5.31 million b/d and distillate demand climbed 371,000 b/d to 3.13 million b/d.

Nationwide efforts to slow the spread of the coronavirus pandemic, including widespread stay-at-home orders, have weighed heavily on refined product demand, forcing refiners to slash run rates and flooding crude storages.

Still, the EIA data was mostly bearish. Total US crude supply climbed 15 million barrels last week to 518.86 million barrels, EIA said.

And storage is expected to keep building to capacity as refiners cut runs because of low demand stemming from the coronavirus pandemic.

S&P Global Platts Analytics expects global refinery downtime to reach 19.3 million b/d the week ending April 24, and remain around that level for the week ending May 1.

“Oil volatility will remain high, as short squeezes will likely deliver excessive rebounds. Now is not the time to be constructive on oil prices,” said Moya. “Until headlines flow that key storage hubs are filled, oil majors announce large production cuts, and smaller shale companies go under, oil prices should remain heavy.”


Bunkerworld .,
23rd April 2020 02:02 GMT