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Oil Context Weekly (W13)
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Oil Context Weekly (W13)

Crude prices hit a fresh year-to-date high as Russia’s production cuts start to seem more real and market outlooks continue to tighten.

Rory Johnston's avatar
Rory Johnston
Mar 28, 2024
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Oil Context Weekly (W13)
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🐰 Happy Easter, Commodity Context subscribers! 

Releasing Oil Context Weekly a day early on this short week with markets closed tomorrow for the holiday.

Hope you all have a fantastic long weekend—I’ll be helping three little bunnies hunt for eggs.


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.

Become a paid subscriber today to get the full Oil Context Weekly report every Friday and join me in my hunt for ever-deeper oil market context.

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.


Summary

Flat Prices rose $2/bbl to a fresh year-to-date high of $87.50/bbl (Brent) as bullish momentum continues to build on tighter projected balances.

Calendar Spreads restrengthened into steeper backwardation, with spot markets briefly reversing their month-long weakening trend and prompt futures spreads (M2 vs M3) set a fresh year-to-date high.

Inventories data leaned bearish this week with builds in the US and ARA Europe, which more than overwhelmed the modest draw in Singapore.

Refined Products margins are weaker (about a $10/bbl lower crack spread for diesel, $5/bbl lower for gasoline) than this time last year, and diesel prices are easier both faster and earlier in the season than usual.

Positioning data for the past week-through-Tuesday is partially delayed—ICE delayed, CFTC not—by the holiday until next week and will be covered in next week’s report; crude prices were slightly lower between the last two report windows, so I expect to see a modest pullback from those exceptionally overextended levels discussed last week.

As Well As the increasing perceived seriousness of Russia’s latest production cuts, triple-digit oil calls re-enter the analyst lexicon, and how to think about OPEC’s “price target”.

What Happened This Week

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