Oil Context Weekly (W27)
Crude closed at its highest level since May 1st and prompt calendar spreads rallied to push both Brent and WTI curves into complete backwardated for the first time in as long a stretch.
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—which this week included lots of Saudi and Russian chatter, headlines coming out of OPEC’s seminar conference, Iranian tanker seizure attempts, and an update on air traffic activity.
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Flat Prices rose ~$3.50/bbl on the week to more than $78/bbl (Brent), with a Friday rally taking contracts to their highest close since May 1st.
Calendar Spreads strengthened and a rally in prompt spreads pushing both Brent and WTI futures curves into complete backwardation for the first time since early May.
Inventories data was universally bullish with headline draws recorded across the US (2.8 MMbbl), ARA Europe (-0.5 MMbbl), and Singapore (-1.2 MMbbl); in the US, the draw was slightly smaller than some expected, but supported by broad draws across all major products.
Refined Products crack spreads saw gasoline down slightly on the week, while diesel gained $2/bbl; this puts the two fuels within spitting distance of one another.
Positioning data confirmed that speculators were net crude buyers to the tune of 48.9 MMbbl on the week-through-Tuesday, bringing us very slightly off the wildly short levels seen last week; despite lifting off the bottom, however, we remain quite short in the scheme and positioning-related price risks remain tilted to the upside.