Oil Context Weekly (W8)
Oil Context Weekly (W8)
Crude prices fell ~$2/bbl despite continued strength in calendar spreads, once again failing to breach the stubborn ~$83-84/bbl resistance level that has capped gains since November.
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Summary
Flat Prices traded choppily sideways for most of the week until falling $2/bbl to ~$81.50/bbbl on Friday after failing once again to breach stubborn $83-84/bbl resistance.
Futures Curves continued to strengthen and signal tight spot market conditions despite flat price weakness; still, the pace of curve steepening has slowed noticeably and Brent CFDs are down from last week’s peak, which indicates that the year-to-date trend of steadily gaining spot market pressure may be topping out.
Inventories data was mixed between a large build in Singapore and draws in the US and ARA Europe, with stocks of crude and dirty products declining and clean products (especially diesel) falling.
Refined Products developments were dominated, once again, by middle distillates as its crack spreads are down precipitously over the past three weeks and, in the case of US diesel, roughly back the lows in early January; even more importantly, the spread between US diesel and European gasoil has fallen to its lowest sustained level since early 2020, largely due to the latter’s relative supply tightness on the back of Red Sea Crisis shipping delays.
Investor Positioning data revealed that speculators were small net buyers of crude contracts over the past week-through-Tuesday, a relatively concerning development given that prices were effectively flat over the period, evidencing less apparent bang for each speculative buck.
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