Oil Context Weekly (W10)
Crude prices fall ~$1.50 but remained well within their month-long range; meanwhile, rapidly easing backwardation in crude calendar spreads is a much greater source of immediate concern.
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Summary
Flat Prices chopped sideways and ended the week down ~$1.50/bbl (Brent), though prices still remain pretty flat over the past month, unable to durably escape the persistent low-to-mid-$80s range.
Futures Curves were a larger source of concern for the barrel as backwardation across all major benchmarks and spreads continued to ease notably off recent peaks over the past two weeks; calendar spreads provide a cleaner signal of market strength than do flat prices, especially when the latter is choppy and generally directionless.
Inventories data was mixed but leaned bullish as US stocks fell under the weight of heavy gasoline and diesel draws, while draws and builds offset each other in Singapore and ARA Europe, respectively.
Refined Products margins eased slightly this week and will likely remain under pressure as refineries, which have been operating at very low levels through February, return to some semblance of normal, which will weigh on prices until summer driving demand support kicks in.
Investor Positioning data revealed that speculators were small net sellers of crude contracts over the past week through Tuesday, though overall net positioning remains overextended bullish which continues to caution downside liquidation risk when those positions inevitably roll over.
As Well As OPEC+’s extension of Q1 cuts into Q2, some wonky discussion of the nonsensicalness of Russia’s latest cut commitments, the Keystone pipeline outage on Thursday, Saudi Arabia’s Aramco equity transfer to the PIF, and the rise of a new oil exporter following the completion of the Niger-Benin pipeline.