Recap: The crude market posted an inside trading on Tuesday but settled higher following Monday’s volatile trading session. The market was well supported as the market remained concerned over supplies from the Middle East as Iran denied it had talks with the U.S. to end the war, contradicting U.S. President Donald Trump, who said on Monday that a deal to end the war could be reached soon. While President Trump seemed determined to reach a deal with Iran, sources stated that it was unlikely that Iran would agree to U.S. demand in any rounds of negotiations. The crude market posted a low of $88.50 in overnight trading and retraced some of Monday’s sharp losses throughout the session. It extended its gains to over $5.20 as it posted a high of $93.36 ahead of the close. The May WTI contract settled up $4.22 at $92.35. However, the market sold off sharply in the post settlement period and posted a low of $86.34 following reports that the U.S. was seeking a month-long ceasefire to discuss a plan to end the war. The May Brent contract settled up $4.55 at $104.49. The product markets ended the session sharply higher, with the heating oil market settling up 23.49 cents at $4.2909 and the RB market settling up 17.31 cents at $3.1480.
Technical Analysis: The oil market on Wednesday will remain driven by the latest headlines regarding the U.S.-Israeli war with Iran following the reports that the U.S. sent a plan to Iran to end the war. It will have to be seen whether Iran will agree to the demands put forth by the Trump administration as some have been a red line in previous negotiations and their negotiating posture has reportedly hardened. The U.S. is demanding that Iran decommission its enrichment plants in Nantz, Isfahan and Fordow and that no nuclear material is enriched in Iran. It also demands a free maritime zone in the Strait of Hormuz and the funding of proxies in the region. The market will also continue to look for developments on the news that the U.S. is expected to send thousands of more troops to the Middle East and the possibility of a further escalation as Saudi Arabia and the UAE have taken steps to join the war. The crude market is seen finding support at $88.50, $84.37, $80.60, $75.64, followed by $73.79 and $72.19. Meanwhile, resistance is seen at $93.36, $95.03, $101.67, $102.44 and $113.41.
Fundamental News:
The Financial Times reported that Iran has told International Maritime Organization member states that “non-hostile vessels” may transit the Strait of Hormuz if they coordinate with Iranian authorities.
Bloomberg reported that Iran has started charging transit fees on some commercial vessels passing through the Strait of Hormuz, another sign of Tehran’s control over the world’s most important maritime energy channel.
The Wall Street Journal reported that Saudi Arabia and the UAE have taken steps toward joining the Iran war, potentially signaling an escalation of the fighting. Saudi Arabia agreed to give the U.S. military access to the King Fahd Air Base, an apparent reversal after saying its bases couldn’t be used to attack Iran. The newspaper also reported that the UAE closed an Iranian-owned hospital and club, undercutting a key source of support for Tehran. The newspaper also said videos apparently showed that some missiles used in attacks on Iran were launched from Bahrain.
The Trump administration will release its 2026-27 biofuel blending volumes obligations this week. Sources said the rule will not differ materially from volumes proposed by the EPA prior to the onset of the Iran war.
Chevron CEO, Mike Wirth, said energy markets are not adequately pricing the oil supply shock caused by the war in Iran. He said based on the amount of supply that has been taken offline and the amount of infrastructure damage, crude futures should be higher.
ConocoPhillips Chief Executive Officer, Ryan Lance, sees the oil market flipping into contango from its current backwardation.
Early Market Call – as of 8:10 AM EDT
WTI – Apr $87.14, down $1.25
RBOB – Apr $2.9366, down 10.32 cents
HO – Apr $3.8697, down 29.42 cents
