Brent rebounds from previous day’s loss amid growing war risk premiums

The front-month ICE Brent contract gained $0.69/bbl on the day, to trade at $87.37/bbl at 09.00 GMT.

PHOTO: An oilfield worker welds an end cap to a pipe as sparks fly next to a derrick at an oil and gas drilling pad site. Getty Images

Upward pressure:

Brent futures reversed yesterday’s losses after geopolitical concerns resurfaced and war risk premiums once again sparked supply concerns in the global oil market.

Israel allegedly struck a nuclear facility in the Iranian city of Isfahan with a missile yesterday in a retaliatory move, according to several media reports. However, the news remains unconfirmed as the Israeli Defense Forces (IDF) have not claimed any attack.

If confirmed, these reports could raise concerns about the possibility of supply risks translating into actual disruptions, commented ING Bank’s head of commodities strategy Warren Patterson.

“The market has been on edge since Iran launched a missile and drone attack on the Jewish state over the weekend,” said ANZ Bank’s senior commodity strategist Daniel Hynes. “Israel’s response could determine whether oil supplies are ultimately under threat,” he added.

Downward pressure:

Downward pressures acting on Brent today arise from lacklustre demand growth indications after the US Energy Information Administration (EIA) reported an increase in crude oil stocks.

US commercial crude oil inventories increased by 2.74 million bbls to 459.99 million bbls on 12 April – the highest level since June last year, the EIA reported.

The inventory gain was “larger-than-anticipated,” said SPI Asset Management’s managing partner Stephen Innes. “The clear read-through is that [oil] demand is not as rosy as thought and that demand destruction, due to soaring prices at the pump, could be setting in even as we head for summer driving season,” he added.

By Aparupa Mazumder

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