Shares of ProShares Ultra Bloomberg Crude Oil (UCO) are experiencing a significant surge, driven by heightened geopolitical tensions between Iran and Israel. The potential for conflict in the Middle East has created volatility in the energy sector, particularly impacting the price of oil. UCO, a leveraged ETF tracking WTI crude oil, is amplifying these price fluctuations, drawing attention from investors seeking to capitalize on the situation.
Oil prices dropped on Wednesday as OPEC+ members discussed potentially delaying a planned output increase in October. Concerns about weakening global demand and the potential resumption of Libyan oil exports fueled the decline. The news followed a broader sell-off in world markets driven by weak economic data from the U.S. and China.
The Indian government has significantly increased the windfall tax on domestically produced crude oil, raising it to ₹6,000 per tonne. This move is likely to impact oil companies and could have broader implications for the energy sector. Further details and analysis are expected.
Crude oil futures declined on Wednesday despite a decline in commercial crude supplies, as the decrease was outweighed by a drop in gasoline demand and increased exports. The Energy Information Administration reported a 6.4 million barrel reduction in commercial crude oil stocks, bringing the total to 453.6 million barrels. However, gasoline demand fell by 239K barrels per day to 8.42 million barrels per day, below levels seen last year. The drop in gasoline demand, combined with a smaller-than-expected decrease in gasoline supply, eased concerns about a tight fuel market. Front-month Nymex crude for June delivery closed down 0.6% at $82.81/bbl, while June Brent crude finished down 0.4% at $88.02/bbl.
Despite recent easing, inflationary pressures in India remain a concern due to potential disruptions caused by adverse weather conditions and ongoing geopolitical conflicts. Extreme weather events and volatility in crude oil prices could impact the country’s inflation trajectory, as highlighted by the Reserve Bank of India (RBI) in its monthly bulletin.
An American Petroleum Institute (API) survey has reported conflicting data on US oil inventories, highlighting differences with the official report from the US Energy Information Administration (EIA). While the API survey had predicted a crude increase of 1.8 million barrels, the EIA report showed a much smaller increase of 528,000 barrels. Furthermore, the API survey’s projections for distillates (-0.9 million barrels) and gasoline (-1.4 million barrels) also diverged from the EIA’s reported declines of 1.2 million barrels and 1.3 million barrels, respectively.
