Alaska North Slope crude was long on gains despite a Good Friday-shortened trading week, vaulting $4.09 or 4.7769% over four trading days to close April 3 at $89.71 per barrel -- up $1.07 on the day.
West Texas Intermediate rose 28 cents on the day to close at $85.43, while Brent added 43 cents to close at $89.35.
Another remarkable aspect of the day April 3 was that ANS overtook Brent with its superior performance, putting ANS at a 36-cent premium over Brent. ANS also scored a $4.28 premium over WTI.
While one day's closing is not enough to confirm a trend, a likely explanation for higher prices on the West Coast -- where ANS is sold -- is that China has recently notched a marked improvement in its economy, while India is continuing to report a hot economy with growing oil demand.
Concurrently, Ukraine has been able to successfully disrupt crude production and refining with drone strikes on Russian oil and gas infrastructure, just as Russia's prime wartime customers are calling for more crude to power their economies.
When Asian countries need extra oil in a hurry, they bid up the price of floating cargoes on the Pacific, snatching up crude that otherwise might offload on the West Coast. It is not uncommon under such circumstances for crude-laden vessels holding offshore Long Beach and Los Angeles to steam away for China, resulting in demand-pull price inflation as American buyers suddenly must compete for cargoes.
On the demand side, U.S. crude supplies for the week ending March 29 grew, but the build was offset by a bullish larger drawdown in fuel stocks.
U.S. commercial crude oil inventories -- not including the Strategic Petroleum Reserve -- jumped by 3.2 million barrels over the previous week to 451.4 million barrels, 2% below the five-year average for the time of year, the U.S. Energy Information Administration said in its April 3 report. Total motor gasoline inventories dropped by 4.3 million barrels for the period to 227.8 million barrels -- 3% below the five-year average for the time of year, the EIA said. Both finished gasoline and blending components inventories decreased. Distillate fuel inventories fell by 1.3 million barrels.
ANS and WTI each leapt $1.44 April 2 to close at $88.65 and $85.15 respectively. Brent leapt $1.50 to close at $88.92.
On April 1, ANS inched 15 cents higher to close at $87.21, WTI gained 54 cents to close at $83.71 and Brent inched 6 cents lower to close at $87.42.
ANS popped $1.44 March 28 to close at $87.05, while WTI surged $1.82 to close at $83.17 and Brent jumped $1.39 to close at $1.39.
Gold shines on commodity reset
Gold is skyrocketing, trading above $2,300 April 3 -- up 13% over 24 trading days.
Gold had a move of similar magnitude in mid-April of 2020, in late July of 2020 and in March of 2022, according to analyst Bryan Rich.
Inflationary policy is the culprit, Rich said in Pro Perspectives April 3.
The 2020 dates were pandemic response related, in alignment with the fiscal response -- more specifically, government putting cash in the hands of citizens -- checks, unemployment subsidies and the "Paycheck Protection Program," he said.
By March 2022 Russia had invaded Ukraine, he said. Inflation was near double-digits on supply chain disruption and the multi-trillion-dollar fiscal pandemic response.
"Adding fuel to the inflation fire, while the clean energy agenda was already curtailing energy supply, Congress responded to Russia with threats to place sanctions on Russian energy exports," Rich said.
Today, geopolitical risk and uncertainty are a constant, but the extreme moves in gold are better aligned with "episodes of overt fiscal profligacy," Rich said, adding, "In this current case, perhaps the catalyst is the $7.3 trillion budget that Biden revealed early last month -- an egregious 6% deficit spending plan in an economy that's growing at a 3% annual rate, with an already ballooning record debt."
Meanwhile, the Bank of Japan has ended an era of negative interest rates, raising borrowing costs for the first time since 2007 as the country puts decades of deflation behind it, The Financial Times said in a March 18 article.
"Kazuo Ueda, the BOJ governor, brought an end to more than a decade of ultra-loose monetary policy, abandoning a swath of easing measures that were put in place to stimulate Asia's most advanced economy," FT said. In a 7-2 majority vote, the BOJ sought to guide its overnight interest rate to a range of some zero to 0.1%, making it the last central bank to end negative rates as a monetary policy tool. Its benchmark rate was minus 0.1%.
Commodities may be repricing against fiat currencies, now that the BOJ has signaled final exit from the global central bank money printing era -- which has delivered record, unsustainable global government debt, Rich said April 2.
Silver has entered a technical breakout, up 4% April 2, he said. Also in technical breakout: copper ... and oil.
