Market Note

Thursday saw Crude Oil prices retreat to a three-week low, trading at $80.87 a barrel, down 2.5% sparked by the growing fears of inventories reaching capacity and unceasing recession angst. The resistance price of $80 a barrel remains to be untested since the end of March. Continuing downward pressure was applied to oil prices last week with the U.S. labour data signifying easing on the labour market, coupled with a decrease in the CPI to 10.1% from 10.4% in March. Tuesday also saw six-month low bearish moves on WTI.

The overriding market feeling is one of abundance, both in Asia and Europe, reports of inventories nearing capacity are at the forefront, made apparent with many LNG tankers unable to deposit.

Uncertainty surrounding China’s economy continues, however first-quarter growth figures year on year, 4.5%, suggest the Covid Zero pressures eased. Furthermore, signifying a potential draw on the oil market to meet demand and the return of a robust Chinese outlook.

Staying in Asia, tensions are rising in the Yellow Sea as China warned of “major military actions” on the coast of Taiwan as a result of Taiwan being rumoured to buy 400 land-launched US Harpoon missiles. The threat of a potential war in Asia could see a return to unprecedented instability within the equity and commodity markets.

Industry Note

Thursday saw easyJet publish their six-month trading outlook, brimming with positive notes. Much attention was paid to fuel prices, with reduced dollar volatility coupled with historical month-on-month increases in Jet Fuel, forcing average fuel seat costs up by 70% compared to last year.

Following the tumultuous nature of the market, easyJet has hedged 70% of its Jet Fuel exposure for six months ($896/MT) and 40% till March 2024 ($890/MT). This reiterates the feeling of uncertainty and increasing costs in all aspects of supply chains, with fuel making up the largest element.