Oil Context Weekly (W17)
Crude prices rally back to just below $90/bbl as spot markets tighten and sentiment gets a broad uplift from rising equity markets.
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 rose more than $2/bbl to finish just shy of $90/bbl, climbing for the first time in two weeks on a combination of fundamental spot market strength and rallying equity markets.
Futures Curves are signaling increasingly tight spot market conditions, especially for Brent barrels, while the WTI cash roll hit its highest level since October 2022; this calendar spread strength has correctly led flat price trajectory over the course of the past month, both down and back up again.
Inventories data leaned bullish between sizable draws in the US and Singapore vs. a small build in ARA Europe.
Refined Products market interest remains driven by diesel’s deteriorating condition, with the middle distillate experiencing plunging crack spreads around the world and all major regional markets now in prompt contango on a perfect storm of weaker demand and fresh supply.
Investor Positioning data confirmed that speculators were larger sellers of crude contracts despite the only ~$1.60/bbl decline between the two sample windows, with the barrel’s resilience to this speculative selling further bolstering the case for strong fundamental spot market support.
As Well As Iraq’s year-long export reduction commitment and final stumbles along the road to commencing operations on the years-delayed Trans Mountain Expansion pipeline in May.