FINWIRES · TerminalLIVE
FINWIRES

Oil Markets Juggle Uncertainty as US Inventories Fall and Asia Prices Weaken, Sparta Says

-- Global oil markets moved in conflicting directions, reflecting geopolitical uncertainty and uneven regional supply trends, Neil Crosby, Head of Research at Sparta Commodities, said in a Wednesday note.

Ongoing developments tied to Iran continue to drive volatility, with negotiations and even plans for talks expected to be prolonged. Prices in some parts of the market suggest expectations of stability, but analysts caution that any lasting resolution remains uncertain.

In Asia, refined fuel prices have come under pressure. Singapore gasoline and diesel benchmarks have dropped sharply compared with Western markets this week. Analysts say this likely reflects a surge in cargo arrivals after heavy shipments in recent months.

Refinery cutbacks in Asia have also been slower than anticipated. This may be due to temporary supply buffers, including oil stored at sea and drawdowns from commercial and government reserves.

Combined with weakening demand, driven by policy measures and high prices, this has contributed to short-term price softness.

"But make no mistake, the loss of AG [Arabian Gulf] crude will necessitate lower and lower Asian refinery operations over time, so Eastern product pricing may well rapidly correct back," Crosby said.

In the US, oil inventories are now declining significantly. Total stockpiles, including the Strategic Petroleum Reserve, fell by more than 2 million barrels per day last week.

At the same time, US crude exports are climbing, supported by strong demand from Asia. Refined product exports are also elevated.

A drop in US refinery runs, despite relatively strong margins, is adding pressure to domestic fuel supplies. While lower distillate prices have supported exports, inventories in key regions such as the East Coast and Gulf Coast are expected to draw down quickly.

"It makes perfect sense that US oil is being drawn upon globally; but US prices will eventually, perhaps quickly, rise to defend their own inventory," Crosby said, adding that the global supply crunch is yet to be felt in full force.

Related Articles

Sectors

Update: Gold Moves Lower Again as Dollar Rises On U.S. Retail Sales Surge and Hopes of An End To Middle East War

(Updates prices.)Gold prices were down a second day midafternoon Tuesday as the dollar rose after U.S. retail sales rose above expectations last month, while talks between the United States and Iran could see an end to the Middle East war that has sent the price of oil and other commodities higher.Gold for May delivery was last seen down US$105.50 to US$4,723.30 per ounce.The U.S. Census Bureau on Tuesday said March retail sales rose by 1.7%, up from a revised 0.7% a month earlier and ahead of the consensus estimate for a rise of 1.5%, according to Marketwatch. The rise was the highest in more than three years, CNN reported, but came on a record jump in gasoline prices due to the U.S. war on Iran.Talks to end the war are expected to begin in Pakistan as a two-week ceasefire is set to end tomorrow. A deal could see an end to the closure of the Strait of Hormuz and lower high prices for oil and other commodities trapped in the Persian Gulf. However, Iran has not publicly confirmed it will send negotiators to Pakistan to meet with the United States, though the Wall Street Journal reports Iran has told mediators it will send a team to the talks."Gold is consolidating as traders assess the prospects for renewed US-Iran talks and the approaching ceasefire deadline. Its near-term trajectory remains closely linked to developments in the Middle East, given the potential spillover into inflation expectations, the dollar, bond yields, and US rate outlook," Saxo Bank wrote.The dollar was higher early, with the ICE dollar index was last seen up 0.33 points to 98.43. Treasury yields were also higher, with the yield on the U.S. two-year note up 6.3 basis points to 3.788%, while the yield on the 10-year note was paying 4.297%, up 4.3 points.

$GCK6$GLD
Sectors

Sector Update: Consumer Stocks Ease in Afternoon Trading

Consumer stocks were lower Tuesday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) down 0.3% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) decreasing 0.2%.In sector news, Redbook US same-store sales rose by 6.7% from a year earlier in the week ended April 18 after a 7% year-over-year increase in the previous week. "Some retailers reported weaker year-over-year Easter sales, facing challenging comparisons to last year's pre-Easter shopping week in April," Redbook noted. Sales of home improvement items and outdoor merchandise picked up as spring began while household basics, food and consumables held steady.In corporate news, Tractor Supply (TSCO) reported Q1 results that missed Wall Street's projections amid a below-average performance of its companion animal product business. Its shares dropped past 10%.D.R. Horton's (DHI) fiscal Q2 results came in better than expected, although the homebuilder tempered its full-year revenue outlook. Its shares rose past 7%.Estee Lauder (EL) has hired JPMorgan (JPM) to come up with a financing package of about 5 billion euros ($5.88 billion) to fund its takeover of Puig, Spanish business newspaper Expansion reported Tuesday. Estee Lauder shares were down 1.4%.

$DHI$EL$TSCO
Commodities

Zelenskyy Says Druzhba Pipeline Restored, Fuel Supplies Secured for April-May

Ukraine's President Volodymyr Zelenskyy said Tuesday that the Druzhba pipeline has been restored, as Kyiv pushes for energy funding and protection of its infrastructure.Zelenskyy said in a post on X that repair work on the Druzhba oil pipeline segment damaged by a Russian strike has been completed, allowing operations to resume.He cautioned that "no one can currently guarantee that Russia will not repeat attacks," despite efforts to restore pipeline functionality and safeguard infrastructure.The pipeline restoration is linked to the expected unblocking of a European Union support package already approved by the European Council, he said.Zelenskyy added Ukraine has fulfilled its commitments under initial European Union negotiation clusters and called for continued sanctions pressure on Russia alongside efforts to diversify Europe's energy supplies.Ukraine is also coordinating closely with partners to ensure stable energy cooperation as global disruptions linked to the Iran conflict impact fuel markets, Zelenskyy added.He noted that agreed fuel supply volumes for April and May have been fully secured.Ukraine is also preparing for an Energy Ramstein meeting later this week, aimed at accelerating funding efforts for energy system recovery and strengthening protection of critical infrastructure, he added.