Oil Context Weekly (W15)
Crude gains for fourth consecutive week but trading remains uncharacteristically stable following OPEC+’s surprise cut and alongside increasingly bullish news flow
Every week, I summarize the developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data and then provide a taste of the themes I’m thinking about or following closely.
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Flat Prices rose for a fourth consecutive week—up a buck-and-change vs. last week’s close—but trading was once again uncharacteristically stable; news flow is increasingly price supportive.
Calendar Spreads were reasonably flat, rising alongside flat prices before decoupling to the downside on Thursday—whether this is a bullish or bearish signal depends on your interpretation of shifts within Brent backwardation in the current environment.
Inventories data was decidedly mixed between a modest build in Singapore (+0.6 MMbbl), a larger draw in ARA Europe (-1.1 MMbbl), and then a relatively large headline build in the US (+8.4 MMbbl) that mostly consisted of non-core products.
Refined Products saw weakness in the case of previously-crisis-tight diesel, which saw crack spreads fall in the continuation of a now-months-long trend; meanwhile, the relative outperformance of gasoline cracks—roughly flat on the week—reflects the rising centrality of consumer, over industrial, activity for current demand growth.
Positioning data revealed that speculators were net buyers of crude futures and options contracts to the tune of 21.7 MMbbl in the week-through-Tuesday, driven by 9.9 MMbbl of fresh longs and a further 11.8 MMbbl of short-covering, with most of that activity driven in WTI contracts.
Russian Production looks like it has finally begun to cede ground in March, with all major published tracking data indicating a monthly pullback—the impetus and intensity of said pullback remains hotly debated, though we seem to be settling around 250 kbpd give-or-take (more on this in an post published tomorrow).