Crude Markets Stabilize After Unprecedented Rout

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Battered by the market-wide sell-off, oil prices managed to halt their decline on Tuesday with ICE Brent recovering slightly to $65 per barrel. However, the US-China trade war could degenerate further with US President Trump threatening further tariffs on China, potentially negating and overwhelming whatever positive moves have been made vis-à-vis South Korea or Japan. Therefore, the short-term outlook remains bearish with investors wary of taking any new positions.

US President Donald Trump announced that if Beijing does not withdraw its 34% import tariff on US goods, the White House will impose an additional 50% tariff on the Asian country with immediate effect from April 09, taking China’s tariff rate to 104%.

Amidst a worsening US-China trade war and continued OPEC+ unwinding, Saudi national oil company Saudi Aramco (TADAWUL:2222) has lowered its Asian formula prices for May-loading cargoes with an across-the-board cut of $2.30 per barrel.

Declines in Iranian and Venezuelan oil production on the heels of tightening US sanctions led to a drop in OPEC oil production in March, with the oil group’s members pumping 26.63 million b/d last month, down 110,000 b/d vs February levels.

The UK government, seeking to respond to US President Trump’s 10% import tariff on the country, is considering the inclusion of refined products in its retaliatory tariffs, sourcing a quarter of its diesel import requirements from the US Gulf Coast.

The May contract of US benchmark Henry Hub futures dipped to $3.74 per mmBtu, the lowest close in almost eight weeks, despite forecasts of colder weather coming across the States, mostly due to concerns of recession halting gas demand growth.

The Panama Canal Authority opened a bidding process for a new pipeline that could transport liquefied petroleum gas across the waterway, potentially speeding up deliveries of US propane to Japan and South Korea, a voyage that now takes up to 35 days.

The government of Libya is offering production sharing agreements to oil majors bidding into its first licensing round since 2008, offering higher returns to investors as the North African country seeks to boost production to 2 million b/d.

US oil major Chevron (NYSE:CVX) was ordered to pay $740 million to restore damages caused by Texaco, a company it bought in 2001, to Louisiana’s coastal wetlands after it failed to clear, revegetate and detoxify its exploration sites.

Since the departure of former Prime Minister Justin Trudeau, oil is back in vogue in Canada with opposition leader Pierre Poilievre vowing to accelerate the approval of 10 key energy projects, including Suncor Energy’s 300,000 b/d Base Plant mine.

In a rare occasion of extreme volatility, the plunging of copper prices below $8,500 per metric tonne in Monday early trading prompted Chinese buyers to maximize purchases, pushing the metal to a $1,000/mt rally in just two hours, the largest intraday move since 2009.

Importing some 6.5 BCf/d of US pipeline gas and poised to import more as legacy fields decline, Mexico has reached out to private investors to expand domestic fracking operations, a policy reversal compared to Lopez Obrador years.

Overcoming the past days’ market frenzy that triggered three consecutive daily declines, gold prices rose back above $3,000 per ounce on the back of a weakening US dollar and a worsening outlook on US-China tariff wars.

US LNG developer NextDecade signed an offtake agreement with Saudi Arabia’s national oil firm Saudi Aramco (TADAWUL:2222) to supply 1.2 million tonnes LNG per year from Train 4 of Rio Grande LNG, subject to a positive FID decision soon.