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Brent crude holds above $65/b on the back of geopolitical tension


Global crude futures retreated slightly from six-months highs seen on
Wednesday during early trading in Europe Thursday. But support for the
whole petroleum futures complex is still strong on the back of ongoing
tensions surrounding Iran, which is putting a healthy risk premium on crude
futures prices, analysts said.
At 10:50 London time (9:50 GMT), the front-month ICE Brent futures
contract was down 8 cents at $65.70/barrel, still holding above the
psychologically important $65/b mark, which was surpassed on Tuesday for the
first time since last September. Similarly, the May WTI contracts on NYMEX and
ICE traded 29 cents lower at $63.79/b after coming very close to $65/b in
Wednesday trading.
Crude and product futures rocketed on Wednesday, after a volatile 24
hours which saw a rumor that Iran had fired missiles at US warships force
crude futures up by near $5/b in a very short space of time, but then
subsequently fell as the White House denied the rumor.
On Thursday prices seem to be rangebound and trading appeared rather
quiet despite fears of conflict between Iran, the US and the UK still being
very present, analysts said.
"It has not been widely publicized but we understand that the US Aircraft
carrier USS Nimitz and its strike group will depart San Diego coming Monday
and head to the Persian Gulf...having three US aircraft carrier strike groups
in the Gulf will be a major escalation" Olivier Jakob said in a Petromatrix
"The strike risk will be at its peak in the next 60 days. We believe
that the oil market will keep the risk premium when it soon realizes that a
third carrier is being sent to the Gulf" he said.
Elsewhere, petroleum prices in Europe are also underpinned by the
ongoing strike by French dock workers in the southern port of Marseille having
a severe impact on refineries in the region, as the port serves a third of
France’s refining capacity.
The weekly US stocks data released Wednesday appeared rather balanced
despite an unexpected draw in commercial crude stock of 900,000 barrels. On
the other hand, the US EIA reported a 300,000 barrel draw in gasoline stocks,
much less than the 1.5 million barrel draw analysts had projected. This led to
RBOB futures retreating in post-stats trading.
Product futures were slightly lower as well on Thursday, with the April
ICE gasoil contract down $5.75 to $570.50/mt. In the US, the NYMEX RBOB and
heating oil futures contracts lost 0.62 cents and 1.29 cents to $2.0510/gallon
and $1.8145/gallon, respectively.


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