Recap: The oil market rallied sharply higher on Monday amid fears that a fragile ceasefire between the U.S. and Iran could collapse. The market, which sold off sharply on Friday after Iran said the passage for all commercial vessels through the Strait of Hormuz was open for the remainder of the ceasefire, retraced its losses after the U.S. seized an Iranian cargo ship that tried to break through its blockade while Iran said it would retaliate, increasing fears of a resumption in hostilities. The crude market posted an inside trading day as it rallied to a high of $91.20 on the opening as traffic through the Strait of Hormuz remained largely halted. The oil market later erased some of its gains and traded mostly sideways as it held some support over the $88.00 in overnight trading. The market, however, breached its low and sold off to a low of $87.02 by mid-morning. The market traded sideways during the remainder of the session. The May WTI contract settled up $5.76 at $89.61 and the June Brent contract settled up $5.10 at $95.48. Meanwhile, the product markets also ended the session higher, with the heating oil market settling up 14.35 cents at $3.5409 and the RB market settling up 1.12 cents at $3.1168.
Technical Analysis: With a two-week ceasefire set to expire later this week, the renewed hostilities cast doubts over prospects for a second round of talks between the U.S. and Iran in Pakistan. Iran is considering attending the peace talks but no final decision has been made. It will have to be seen whether the diplomatic process continues or the ceasefire collapses. The market will remain supported as shipping through the Strait of Hormuz remains at a standstill. The oil market is seen finding support at $87.02, $80.56, $75.64, $73.79, $72.19, $69.93, $69.00, $67.78 and $67.65. Meanwhile, resistance is seen at $91.20, $94.04, $94.72, $95.44, $98.00, $99.10, $103.47 and $105.63.
Fundamental News: U.S. President Donald Trump dismissed his top energy official’s view that gas prices will not fall until 2027, saying Americans can expect lower costs as soon as the Iran war ends. On Sunday, U.S. Energy Secretary Chris Wright told CNN that while gasoline below $3/gallon “could happen later this year, that might not happen until next year.” According to an estimate by AAA, the average price for a gallon of regular gas on Monday was $4.04/gallon compared with $3.15/gallon a year ago.
Bloomberg News reported that Kuwait has declared force majeure on shipments of crude oil and refined products after a blockade of the Strait of Hormuz prevented some vessels from entering the Persian Gulf, hindering its ability to meet certain customer commitments. State-run Kuwait Petroleum Corp. notified customers on Friday that it was invoking a contract clause allowing it to withhold scheduled deliveries. It added that the decision is not expected to result in a complete halt in supply.
Kpler data showed that crude oil loadings from Saudi Arabia’s Red Sea port of Yanbu averaged about 3.5 million bpd in the week beginning April 13th, down 17% on the week and the lowest level since the second week of March.
IIR Energy said U.S. oil refiners are expected to shut in about 839,000 bpd of capacity in the week ending April 24th, increasing available refining capacity by 98,000 bpd from the previous week. Offline capacity is expected to fall to 561,000 bpd in the week ending May 1st.
Phillips 66 reported emissions at its 149,000 bpd Borger, Texas refinery.
Kyiv’s drone forces commander, Robert Brovdi, said the Ukrainian military hit Russia’s 240,000 bpd Tuapse oil refinery in a second attack in less than a week.
Early Market Call – as of 8:35 AM EDT
WTI – May $89.02, up $1.22
RBOB – May $3.1296, up 4.36 cents
HO – May $3.5747, up 4.31 cents
