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Oil Prices Bullish Triggered by Gaza Conflict and Russian Supply
Oil Prices Bullish Triggered by Gaza Conflict and Russian Supply
Wednesday, 03 April 2024

Price Performance Indicators

Product

Previous Week

% Change

COFU

 $83.08

1.39%

CPOTR

 Rp13,555

1.54%

WTI

 $83.17

1.49%

BRENT

 $87.00

0.29%

USD/IDR

 Rp15,853

0.51%

NG

 $1.76

9.16%

  • In a week (3/25 - 3/29) the price of ICDX’s crude oil edged up 1.39 percent.   
  • The highest volatility reached 1.58 percent. 

***************************************************************

Market Review

The price movement of crude oil contracts transacted on ICDX throughout the week ending March 29 experienced a bullish rally with the lowest price at $81.23 per barrel and the highest at $83.08 per barrel. Some of the main sentiments that became positive catalysts for oil prices this week included the Israel - Hamas conflict, Ukraine's attack on Russian energy facilities, and Novak's statement regarding Russia's focus in the second quarter of this year.

Following the ceasefire resolution in Gaza agreed on Monday (25/3), the UN called on countries in the world to immediately impose sanctions and an arms embargo on Israel, because the Israeli military invasion of Gaza since October 7 was considered an act of genocide. However, as of the end of the week, calls for a ceasefire had not been achieved, in fact triggering an escalation of tensions that had the potential to disrupt oil supplies from the Middle East region.

Meanwhile, Ukraine's recently launched drone strikes have led to the shutdown of at least 7 Russian refineries throughout the first quarter, with a capacity of around 4.6 million tons (~370,500 bpd), or about 7% of Russia's total production. In fact, since March 1, Russia has banned gasoline exports to ensure sufficient fuel for the domestic market. Two industry sources (27/3) said that the Russian government is currently holding further discussions regarding gasoline imports from Belarusian oil companies.

Russian Deputy Prime Minister Alexander Novak on Friday (29/3) said that his oil company would focus on reducing production rather than exports in the second quarter, so as to achieve production quota allocations as agreed together with other OPEC+ member countries. Novak's comments followed previous news (25/3) from industry sources which said that the Russian government had directly ordered energy companies in Russia to meet the production target of 9 million bpd by the end of June. This adds further confidence to Russia's supply tightening in the short term.


Market View

Iraq and Nigeria Contribute to OPEC+ Production Decline in March

OPEC+ oil production in March reportedly fell by 50,000 bpd to 26.42 million bpd, a survey conducted by Reuters showed on Monday (1/4). In the survey, it can be seen that the largest decline in output occurred in Iraq and Nigeria. Meanwhile, a panel of key OPEC+ ministers is scheduled to meet on Wednesday (3/4) to review oil market conditions and members' compliance with agreed production quota commitments, and is not expected to recommend any policy changes ahead of the full meeting of producer alliance group that was set on June 1.


Factory Activity Increases, Positive Signal of China's Economic Recovery

China's manufacturing activity in March reportedly rose for the first time in six months, an official survey released Sunday (31/3) showed. PMI data for March rose to 50.8 from 49.1 in February. Although the growth rate was not very significant, this figure was the highest since March last year. Additionally, a private survey released Monday showed the Caixin PMI expanded at its fastest pace in 13 months in March, with business confidence reaching its highest level in 11 months, S&P Global said. This bright prospect for China's economy also adds to optimism about economic recovery in the world's first largest oil importer.



WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data/Events

Actual

Expectation

Previous

2-Apr

USA - API Crude Oil Stocks Change

-1.461M

N/A

9.337M

2-Apr

USA - API Gasoline Stocks Change

-2.286M

N/A

-4.437M

3-Apr

USA - EIA Crude Oil Stocks Change

 

-1.511M

3.165M

3-Apr

USA - EIA Gasoline Stocks Change

 

-0.820M

1.299M

5-Apr

USA - Baker Hughes Oil Rig Count

 

N/A

506

Source: ICDX Research

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