Oil Context Weekly (W24)
Crude ends bumpy week $2/bbl higher on Beijing’s latest return to its ole’ faithful legacy industry stimulus engine.
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 nearly $2/bbl vs last Friday’s close, but the week was filled with volatile ups and downs, with crude gaining and losing $3/bbl in multiple steep swings over the past five days; late-week strength came on the back of renewed Chinese stimulus measures.
Crack Spreads weakened further and brought prompt Brent spreads into contango for much of the Friday session, joining the first two months of WTI, before ending the day in very modest backwardation vs the second month; WTI saw prompt spreads widen to their steepest contango since February.
Inventories data was mixed but leaned definitively bearish thanks to the third consecutive weekly US total commercial petroleum build in excess of 10 MMbbl.
Refined Products strengthened on the week, with diesel crack spreads hitting their highest level since March and gasoline cracks made further gains back to May levels, which were the highest since the end of last summer.
Positioning data confirmed that speculators modest sellers of crude futures and options contracts last week, bringing the net spec position as a proportion of total open interest in major crude contracts to 5.4% and staying well within the 5-5.75% range in which we’ve been trapped for the better part of two months.