Once again it seems like the Easter holiday could turn out to be a turning point for the global oil market. Oil prices continue to work lower in the aftermath of disappointing Chinese trade data as well as renewed hopes that perhaps the world can avoid a major conflict with Iran. Also the market anticipates another increase in US crude supply and anxiously awaits the return of refineries coming back from maintenance.

China shocked the market with a surprise trade surplus of $5.35 billion in March. China, the exporting machine, may be showing signs of a domestic slowdown being hit by the slowing Europe as well as rising energy costs. At the same time it seems that China's domestic consumption is raising concerns once again of a potential hard landing in the land of the dragon.

Of course the other issue is Iran. Is there hope that we can avoid a war? The AP reports that, Iran is signaling a possible compromise offer as it heads into crucial talks with world powers deeply suspicious of its nuclear program: offering to scale back uranium enrichment but not abandon the ability to make nuclear fuel. The proposal -- floated by the country's nuclear chief as part of the early parrying in various capitals before negotiations get under way Friday -- suggested that sanctions-battered Iran is ready to bargain. But this gambit, at least, appeared to fall short of Western demands that Iran hand over its most potent nuclear material and ease a standoff that has rattled nerves and spooked markets with seesaw oil prices and threats of Israeli military strikes. The talks involving Iran and the five permanent United Nations Security Council nations plus Germany, to be held in Istanbul, are the first direct negotiations on Tehran's nuclear program since a swift collapse more than 14 months ago. Despite far-reaching complexities, the dispute effectively boils down to one issue: Iran's stated refusal to close down its uranium enrichment labs. In other words, don't count on it.

Reuters News is reporting that Japanese trading houses are reducing Iranian crude imports from April, industry sources said on Tuesday, joining the country's refiners in deepening cuts even after the United States said Japan had done enough to support sanctions against Iran. The U.S. and the European Union have tightened measures aimed at reducing Iran's oil trade, stemming the flow of petrodollars to Tehran and forcing the Islamic Republic to halt a nuclear program the West suspects is intended to produce weapons. Between them, Japan's trading houses and refiners will reduce Iranian crude imports by about 60,000 barrels per day (bpd) in April, industry sources said. The reduction is the equivalent to about 18.5 percent of the 322,900 bpd that Japan imported in the first two months of the year, according to the latest government data available. Some of Japan's trading companies, like some of its refiners, let annual import contracts with Iran lapse at the end of March, industry sources said.

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