Oil Context Weekly (W25)
Crude prices rose to the highest weekly close since April as a steepening futures curve continues to point to tighter prompt markets and contracts benefit from an ongoing return of speculative flows.
Every week, I summarize and analyze 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.
If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.
Summary
Flat Prices continued to rally, up nearly $3/bbl to more than $85/bbl Brent for the highest weekly close since April and almost $10/bbl higher over the past two and a half weeks.
Futures Curves are strengthening rapidly and far steeper backwardation indicates an implicitly tighter prompt market, although likely also reflects a return of hot money length coming off acutely oversold levels.
Inventories data was split between draws in the US and ARA Europe and a build in Singapore, but headline inventories across all three major hubs are sitting around seasonal levels ahead of what is typically the start of a drawing period.
Refined Products markets returned to some seasonal order as gasoline prices rallied to, once again, overtake diesel prices after last week’s seasonally abnormal emergence of a driving seasonal diesel premium over gasoline.
Investor Positioning data revealed that speculators were material buyers of Brent crude contracts over the past week through Tuesday, though WTI data is delayed until Monday due to the Juneteenth federal holiday; while hot money flows no doubt supported this latest rally, positioning still remains comparatively short relative to recent history, leaving positioning risk largely tilted to the upside.
As Well As the passing of Canadian Bill C-59, which contains controversial and vague “anti-greenwashing” amendments to the Competition Act, Iran claims further crude production gains well above levels reflected in official OPEC data, and the first named storm of what is expected to be a reasonably severe Atlantic hurricane season.