Oil Context Weekly (W6)
Crude prices re-reverse, gaining nearly $5/bbl to erase most of last week’s declines following another intensification of the Israel-Hamas war alongside a more gradual spot market retightening.
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Flat Prices rose nearly $5/bbl to almost completely undo last week’s selloff, driven by what appears to have been an earnest retightening of physical markets that received a boost of once-again collapsed Israel-Hamas negotiations.
Futures Curves strengthened, with Brent shifting into its steepest prompt backwardation since October and WTI flipping back into backwardation from the depths of its recent contango.
Inventories data leaned bullish on a headline basis, through draws were isolated to refined products while crude stocks rose.
Refined Products markets strengthened considerably this week, with both gasoline and middle distillates crack spreads hitting their highest level since last Fall.
Investor Positioning data confirmed the strongest week of net speculative crude selling since early-October, confirming that last week’s selloff was driven by the retreat of hot money; however, this week’s volatile price re-reversal was almost surely driven by some of those participants returning, leaving us likely not far off a positioning level around the midpoint of recent experience—meaning no clear directional positioning-related price risk.
As Well As the latest setback in Israel-Hamas ceasefire negotiations that sent crude prices surging, fresh record Guyanese production as the third project hits full capacity, yet more Venezuelan threats against ExxonMobil operations in Guyanese waters, a slew of milestones for the much-delay newest cohort of global refineries, and a longer-than-expected BP Whiting outage.