Oil Context Weekly (W15)
Oil prices chop sideways on a flurry of Iranian threats against Israel but ultimately end the week down as the market awaits what exactly said retaliation might look like.
Sat down with the Financial Post again for a video interview on the current state of the oil market, which you can watch in full for free here.
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 chopped violently sideways, setting a fresh year-to-date high on Friday but ultimately ending the week slightly lower despite concerns about an imminent attack by Iran against Israeli soil.
Futures Curves weakened slightly, suggesting an easing of spot market pressures associated with Israel-Iran related precautionary buying by physical players as well as geopolitical hedging by speculative players—at least until we get some concrete resolution to Tehran’s latest threats of direct attacks against Israeli targets.
Inventories data was universally bearish, with sizable builds in Singapore and ARA Europe on top of a very large into commercial US tanks; overall inventory levels remain reasonably well stocked with the exception of US gasoline and diesel inventories, which represent the only continued spot of tightness across major tracked inventory hubs.
Refined Products markets staged an about-face, with gasoline prices regaining strength while the price of diesel retreated from nearly overtaking gasoline last week.
Investor Positioning data revealed that speculative participants slowed their pace of net purchases this past week; most notably, speculators were adding both long and short positions as the previously unified bullish sentiment begins to fray.
As Well As the latest in Iran’s mounting threats of attacks against Israeli territory and the IEA’s latest demand forecast downgrade puts it at even greater odds with OPEC’s far more bullish demand outlook.