Demand fear hits ANS
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Iran vs Israel attack falls flat; China woes, US supplies take stage
Steve Sutherlin Petroleum News
Alaska North Slope crude plummeted into the $80s April 17, off $2.46 to close at $87.82 per barrel, as West Texas Intermediate plummeted $2.67 to close at $82.69 and Brent plummeted $2.73 to close at $87.29.
The dramatic movement came as traders factored in no evidence of disruption of crude shipments arising from Iran's massive but thwarted drone and missile attack directed at Israel over the weekend.
"At the end of the day, the conflict between Iran and Israel has not disrupted the supply of oil outside of the Houthis' impact on Red Sea transit," said Troy Vincent, senior market analyst at DTN, as quoted in an April 17 MarketWatch report.
"Without the war spilling over into attacks on oil infrastructure in other Gulf nations, or the U.S. stepping up enforcement of Iranian oil-export sanctions, the odds of this war materially impacting oil supply remain low," he said.
In the lull of immediate worries over supply interruptions, traders were free to fret over a surprise build in inventories in the United States and chinks in the armor of China's long awaited economic recovery from pandemic woes.
U.S. commercial crude oil inventories for the week ending April 12 not including those in the Strategic Petroleum Reserve jumped by 2.7 million barrels from the previous week to 460.0 million barrels -- 1% below the five-year average for the time of year, the U.S. Energy Information Administration reported April 17. It was fourth straight week of inventory increases.
Analysts surveyed by The Wall Street Journal had predicted a 600,000-barrel rise.
The U.S. government added a trickle of crude to the SPR -- 648,000 barrels -- to push levels to 364.9 million barrels, the EIA said.
Total motor gasoline inventories countered with a bullish drawdown of 1.2 million barrels for the period to 227.4 million barrels -- 4% below the five-year average for the time of year, the EIA said.
The Wall Street Journal poll foresaw a 1 million barrel drop.
Distillate fuel inventories fell 2.8 million barrels for the period to 115 million barrels -- 7% below the five-year average for the time of year.
China's GDP up China- s gross domestic product in the first quarter rose by 5.3% year on year at constant price, according to an April 16 release from the National Bureau of Statistics of China.
There were some standout sectors.
Investment in manufacturing of aerospace vehicles and equipment grew by 42.7%, while investment in e-commerce services and in information services grew by 24.6% and 16.9% respectively, the bureau said.
But the important real estate sector continued to struggle. Total sales of new commercial buildings were down by 27.6%, the bureau said.
George Magnus, associate at the University of Oxford China Centre told Newsweek for an April 17 article that the forward momentum is unlikely to last.
- March monthly data on the economy were much softer than the recently announced Q1 GDP data, deflation risk still stalks the economy, and the widely discussed need to strengthen consumption spending isn't finding traction in action to bolster household incomes and spending,- Magnus said, adding that if the economy lags over the summer, he expects some stimulus in the second half, but Beijing may not shore up the household sector - other than cyclically, if at all.-
No clear interest rate guidance ANS shed 29 cents April 16 to close at $90.28, while WTI edged down 5 cents to close at $85.36 and Brent shed 8 cents to close at $90.02.
U.S. Federal Reserve officials including Chair Jerome Powell declined to provide any clear guidance April 16 as to when the nation's benchmark interest rate might be cut, leading investors to price out any meaningful relief from high borrowing costs on the near future.
On April 15, ANS gained 13 cents to close at $90.58, WTI shed 25 cents to close at $85.41 and Brent lost 35 cents to close at $90.10.
Although the risk of a broader conflict in the Middle East continued to loom over the market, crude prices failed to blast off Monday April 15 after Iran's attack on Israel over the weekend.
The "risk premia" had been priced into oil since an Israeli strike on Iran's consulate in Syria took place early this month, Darwei Kung, head of commodities and portfolio manager at DWS Group told MarketWatch.
'Given the tone from the U.S. and its allies, as well as the delay in Israel's government's actions, we believe the market priced out some of the potential upside" April 15, he said.
April 12 was an up day, seeing ANS up 28 cents to close at $90.45, WTI up 64 cents to close at $85.66 and Brent up 71 cents to close at $90.45.
ANS fell 41 cents April 11 to close at $90.17, while WTI plunged $1.19 to close at $85.02 and Brent fell 74 cents to close at $89.74.
For the week Wednesday to Wednesday, ANS lost $2.75 from its close of $90.57 on April 10 to a close of $87.82 April 17.
On April 17, ANS sold at a premium of $5.13 over WTI, and ANS sold at a premium of 53 cents over Brent. ANS and Brent closed at $90.45 each on April 12.
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