ANS hovers near $90
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ANS, Brent back in low-$90s as Middle East tensions fan oil prices higher
Steve Sutherlin Petroleum News
Alaska North Slope crude and Brent crude both jumped back into the $90s April 10 as traders contemplated the specter of a direct confrontation between Iran and Israel.
ANS lifted 96 cents to close at $90.57 per barrel, while West Texas Intermediate jumped 98 cents to close at $86.21 and Brent jumped $1.06 to close at $90.48.
ANS was up 86 cents for the trading week ending Wednesday, April 10, from a close of $89.71 April 3 to $90.57 on April 10.
Fears are that Iran may attack Israel in the wake of Israel's hit on the Iranian embassy in Syria in early April.
U.S. intelligence and U.S. allies believe drone or missile attacks by Iran on government and military targets in Israel is imminent, Bloomberg said, citing people familiar with the situation.
Prices were also fanned higher as a deadly air strike by Israel in Gaza killed three sons and other family of a senior Hamas official, complicating negotiations for a cease fire and hostage deal between Israel and Hamas.
"Bottom line, tensions remain elevated between Israel and Hamas and while ceasefire talks are as close as they have been yet, there remain risks of further escalation and a contagion effect in the region, particularly with Iran who recently threatened to close the Strait of Hormuz, which sees about one fifth of the world's seaborne oil trade flow through it," Sevens Report Research analysts said in an April 10 newsletter, MarketWatch reported.
Crude prices rose despite a surprise build in U.S. inventories, reported by the U.S. Energy Information Administration in its April 10 Weekly Petroleum Status Report.
U.S. commercial crude oil inventories for the week ending April 5 -- not including Strategic Petroleum Reserve volumes -- jumped by 5.8 million barrels from the previous week to 457.3 million barrels, 2% below the five-year average for the time of year, the EIA said.
Analysts answering a poll by The Wall Street Journal had predicted an 800,000-barrel increase in crude stocks.
Total motor gasoline inventories increased by 0.7 million barrels for the period to 228.5 million barrels, 3% below the five-year average for the time of year, the EIA said. Distillate fuel inventories increased by 1.7 million barrels over the week.
Oil prices were hit, along with other financial assets April 9, as investors hoping for the U.S. Federal Reserve to begin easing its benchmark interest rate saw hopes dashed on reports of higher U.S. inflation, which led to hawkish remarks from the Fed.
ANS plunged $1.02 April 9 to close at $89.61, as WTI plummeted $1.20 to close at $85.23 and Brent plunged 96 cents to close at $89.42.
Crude prices were off April 8 as well. ANS fell 42 cents to close at $90.64, as WTI fell 48 cents to close at $$86.43 and Brent fell 79 cents to close at $90.38.
Peter Andersen, CIO of Andersen Capital Management, said oil prices could affect the Fed in its interest rate policy decisions.
"This will present a speed bump to any of the Fed calculus that's out there," he said in an April 8 interview with FOX's "Mornings with Maria," adding, "As oil prices rise, certainly, you know, there is going to be an interpretation of that as inflation."
Oil prices had hit 2024 peak levels April 5, with ANS up 10 cents to close at $91.05, WTI up 32 cents to close at $86.91 and Brent up 52 cents to close at $91.17.
On April 4, ANS surged $1.24 to close at $90.95, WTI surged $1.16 to close at $86.59 and Brent surged $1.30 to close at $90.65.
Higher prices loom Analysts saw continued higher prices ahead as tension in the Middle East melded with stronger economies in the United States, China and Europe, while the Organization of the Petroleum Exporting Countries and its allies constrict supply.
"It's supply-and-demand with geopolitics thrown in on top," Paul Horsnell, global head of commodities at Standard Chartered was quoted by Financial Times April 7.
Crude prices will likely range between $80 and $100 per barrel in 2024, according to Vitol Group, the world's largest independent oil trader.
Vitol expects consumption to grow by 1.9 million barrels per day in 2024, Vitol CEO Russell Hardy said April 9 at the Financial Times Commodities Global Summit in Lausanne, Switzerland, Bloomberg reported.
Oil prices over the next year are largely in the hands of OPEC+, according to Sebastian Barrack, head of commodities at Citadel hedge fund.
If OPEC+ carries its cuts beyond June, tightness in the market will be "very constraining" and high prices will have to "help destroy demand to solve that problem," Barrack said at the FT Commodities Global Summit, Oilprice.com reported. OPEC+ may not be willing to cripple demand, however.
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