Crude futures rebound in Asia trade after Trump's tweet on Iranian warships

Singapore — 0145 GMT: Crude oil futures rebounded in mid-morning trade in Asia Thursday after US President Donald Trump threatened action against Iranian warships in the Persian Gulf.

At 9:45 am Singapore time (0145 GMT), ICE Brent June crude futures were up 61 cents/b (2.99%) from Wednesday's settle at $20.98/b, while the NYMEX June light sweet crude contract was up 50 cents/b (3.63%) at $14.28/b.

"News that President Trump had ordered the Navy to shoot down Iranian gunboats may have been the spark that started the rebound," ANZ analysts said in a note Thursday.

Trump tweeted Wednesday: "I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea."

The tweet sparked a rebound in oil prices, which have plummeted in recent days. Nonetheless, the global supply glut continues to cap substantial recovery.

"The backdrop is poor with weak demand and rising inventories... prices are likely to remain under pressure until we see a significant cutback in supply," the ANZ analysts added.

Total US crude supply rose 15 million barrels to 518.86 million barrels in the week ended April 17, Energy Information Administration data released Wednesday showed.

However, total US product supplied rose 306,000 b/d to 14.10 million b/d over the same period, the EIA data showed. This means US refined product demand has recovered slightly, although the overall outlook remains bleak amid suppressed demand.

Global lockdowns due to the COVID-19 pandemic have slashed refined product demand, prompting multiple refiners to cut run rates in recent weeks.

S&P Global Platts Analytics expects global refinery downtime to reach 19.3 million b/d in the week ending April 24, and remain around that level for the week ending May 1.

Demand for oil storage has also surged amid a steep contango structure for oil futures. Price volatility remains high in the near term, analysts said.