Oil Context Weekly (W7)
Crude prices gain another $1/bbl despite notable inventory builds and plunging refined product markets, but remain capped at the upper end of the range in which we’ve traded since November.
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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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Summary
Flat Prices rose ~$1/bbl to just above $83/bbl (Brent) through volatile trading and building off last week’s gains; contracts currently sit at the upper end of the trading range that has persisted since November.
Futures Curves continue to strengthen as front-end backwardation steepens, indicating tighter spot market conditions; even more constructive for associated equities, the back of the crude curve is now ~$3/bbl higher year-to-date.
Inventories data leaned bearish as builds across all major tracked hubs and headline inflows were punctuated by material inflows of US crude, Singaporean gasoil, and European products across the board.
Refined Products got slammed, with diesel crack spreads experiencing their steepest weekly pullback since early October as the narrative that drove last week’s rally—i.e., European gasoil supply concerns—was popped by the arrival of delayed shipments rerouted away from the Red Sea, which swelled ARA European stocks.
Investor Positioning revealed that speculators were net buyers of crude contracts to the tune of almost 60 MMbbl over the past week-through-Tuesday; while choppy, the spec positioning trend has remained steadily more bullish coming off late-2023’s overexaggerated bearishness.