By any standard, the month of March was shocking, unprecedented, turbulent, vicious, and nightmarish—take your pick. The returns of the five major oil futures and options contracts were eye-watering. They are summarised in the table below, with rollovers arbitrarily taking place on the penultimate trading day of March.
Whether the sharp sell-off in oil prices yesterday and the rally in equities were the result of end-of-month and end-of-quarter positioning or unconfirmed reports of Iran's willingness to end the war is unclear. In the latter case, the reopening of the Strait of Hormuz will be in focus. The possibilities are discussed below. What were, nonetheless, factual developments were the strengthening of the backwardation in both the WTI and Brent structures, notwithstanding the fall in outright prices, renewed overnight attacks on the Gulf states and Iran, and the US warning its citizens in Saudi Arabia to shelter due to alleged threats against US interests in the country.
Another morning, another attempt at panning for truth. Yesterday, the US President promised to obliterate Iran’s power stations and desalination plants if Tehran did not shortly agree to the terms of ceasefire proposed in its fifteen-point plan. Such bullishness kept prices propped most of yesterday, but an overnight article in the Wall Street Journal indicates that privately, Donald Trump might just be a little more pliant.
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