Oil Context Weekly (W22)
OPEC+ weekend! Crude prices fell $6/bbl through mid-week before regaining almost all losses by Friday on macro updraft; speculators very short crude heading into contentious OPEC+ meetings.
Happy Friday and OPEC+ Meeting Eve,
I had the pleasure of joining BNN Bloomberg to discuss this week’s price slump—though before the snap-back rally—ahead of the OPEC+ meetings this weekend. The majority of the write-up below is related to the market and political context in which OPEC+ ministers find themselves while attempting to chart production policy over the next two days.
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 experienced yet another rollercoaster of a week, falling $6/bbl through Wednesday on crude-specific skepticism only to get rescued, and climb back to a loss of only $1/bbl, by the macro uplift of debt ceiling relief and supportive US economic data alongside broader equity markets.
Calendar Spreads were reasonably uneventful as bellwether spreads mostly just tracked (or pulled?) flat prices alongside through the week; however, one important note is that, with Brent contract rollover, the curve is now once again entirely backwardated.
Inventories leaned bearish on the back of large US inventory builds, which is the near-total reverse of last week’s overwhelming bullish across-the-board draws.
Refined Products crack spreads were reasonably steady in the way of pronounced crude price gyrations; my main point of note is that the roll of the heavily backwardated NYH gasoline contract
Positioning data revealed that speculators were net-sellers of crude futures and options contracts to the tune of 8.4 MMbbl, driven by an 11.9 MMbbl increase in gross shorts; net spec positioning remains extremely bearish and positioning risk is tilted squarely to the upside, especially heading into this contentious OPEC+ meeting weekend.