Oil Context Weekly (W1)
Crude prices kicked off 2024 with whiplash-inducing daily moves out the gate, ultimately ending the week higher but without any firm sense of direction.
Happy 2024, Commodity Context Subscribers! Looking forward to seeing what fun another year in the oil market yields.
Every week, I summarize developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.
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Flat Prices were on a roller coaster ride, up and down by 2-3% at a time to ultimately end the week nearly $2/bbl higher.
Futures Curves strengthened, with Brent spreads shifting into steeper backwardation and WTI prompt spreads nearly escaping contango for the first time since mid-November.
Inventories data leaned bearish with builds across all major tracked storage hubs; extreme moves in US stocks (i.e., big crude draws and even bigger refined product builds) are more likely driven by year-end tax strategies than anything structural.
Refined Products were under pressure as diesel crack spreads gained slightly but remained around the $30/bbl level and gasoline fell back nearly $3/bbl to fall below $10/bbl.
Investor Positioning data revealed that spec positioning pulled back again through the final week of 2023, marking the largest reduction in net positions held by hedge funds and other money managers since the end of October.
As Well As OPEC+ reminding us that it’s still supporting the market, Libyan production disruptions, an apparently one-and-done issuance of Chinese crude import quotas, and the funny ways in which the currently heavily sanction-laden oil market is more vulnerable to bilateral pricing disputes.