EIA Surprises Market, Brent-WTI Soars
Oil prices rose sharply on Wednesday (April 22), supported by a combination of tighter-than-expected US inventory data and heightened security risks in the Strait of Hormuz amid stalled US-Iran diplomacy. Brent closed up US$3.43 (+3.48%) to US$101.91/barrel, while WTI gained US$3.29 (+3.67%) to US$92.96/barrel. Both extended their rally after rising by around 3% the previous day, with WTI briefly gaining more than US$4 intraday.
From a fundamental perspective, the EIA report indicated a "tight product" signal despite rising crude stocks. US crude inventories rose by 1.9 million barrels to 465.7 million, but gasoline inventories fell by 4.6 million barrels to 228.4 million (vs. expectations of a 1.5 million decrease). Distillate inventories fell 3.4 million barrels to 108.1 million (vs. an estimated 2.5 million drop). The drop in gasoline and distillate inventories signaled tighter demand/product flows, supporting prices amid sensitivity to supply risks.
Geopolitical risks returned to the forefront after reports of gunfire hitting at least three container ships in the Strait of Hormuz and the seizure of two vessels by the IRGC Navy for maritime violations, according to Tasnim. Amid the war that effectively restricted the flow of Hormuz—a passageway for about 20% of global oil and LNG before the conflict—the US and Iran both imposed restrictions on shipping passage. Although Trump announced an indefinite extension of the ceasefire on Tuesday, talks in Pakistan failed to materialize, and it remains unclear whether Iran or Israel would agree to the extension.
On the diplomatic front, Iranian Parliament Speaker Mohammad Baqer Qalibaf emphasized that a ceasefire only makes sense if it is not “violated” by the US blockade of Iranian ports, calling reopening Hormuz impossible amid such “blatant violations.” Tensions have also spread to Lebanon: reports indicate four people were killed in an Israeli attack in southern Lebanon, while Hezbollah claimed to have launched drones at Israeli forces—adding to the risk that the regional conflict remains volatile.
Essentially, the oil rally is now driven by two mutually reinforcing channels: supply concerns (Hormuz/maritime security) and product tightness (gasoline-distillate). The market will be monitoring evidence of ship traffic in Hormuz, the continued Iran/US response, and subsequent inventory data to see if pressure shifts from a “risk premium” to a more permanent physical tightness. (Arl)*
Source: Newsmaker.id
