Oil Context Weekly (W16)
Crude prices fell nearly $5/bbl this week as the barrel depressingly embarked upon yet another round of the same stubborn range trade in which we’ve been trapped since December.
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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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Summary
Flat Prices fell nearly $5/bbl this week as crude resumed the persistent range-trade in which we’ve been trapped since December, though range-driving downturn saw additional confirmation from weakening calendar and crack spreads.
Calendar Spreads eased alongside and confirming weakness in flat prices, though both the Brent and WTI futures curves remain fully backwardated.
Inventories data were mixed this week but leaned modestly bullish, with a reasonably-sized draw in Singapore (-1.7 MMbbl) and a small draw stateside (0.4 MMbbl) was partially offset by a small build in ARA Europe (+0.5 MMbbl).
Refined Products continued to ease over the past week, adding some downstream confirmation to the weakness seen in crude market; diesel crack spreads, the epicenter of the past year’s refining market crisis, have eased back to nearly pre-pandemic normal levels as supplies catch up and business-related demand eases off.
Positioning data revealed that hedge funds and other money managers were once again net buyers of crude futures and options contracts in the week-to-Tuesday; however, given that prices this week mostly began to crumble in earnest beginning on Wednesday, after the window covered in this latest Commitments of Traders survey, it is quite likely that we did in fact see spec participants trim their net exposure through the latter half of the week.