Oil Context Weekly (W27)
Crude prices rose [slightly] for the fourth consecutive week on the back of further hot money inflows, yet gains are slowing and the pace of term structure strengthening has flatlined.
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 rose but then returned most of those gains as Hurricane Beryl impact expectations shifted bearish and geopolitical headlines softened on renewed Israel-Hamas ceasefire negotiations.
Futures Curves remained mostly unchanged as the pace of strengthening crude term structure ground to a halt.
Inventories data leaned bullish on a large headline draw in the US that tentatively reversed its recently-weaker trajectory; ARA European stocks drew notably vs. a modest build in Singapore.
Refined Products markets saw diesel crack spreads gain modestly; but, the real improvement was in gasoline term structure where prompt spreads ripped higher and, at least for now, quashed US driving season concerns.
Investor Positioning data confirmed that speculators were once again sizable buyers of Brent contracts (WTI data delayed until Monday) but given that prices were flat on the week it’s clear that those hot money inflows are yielding rapidly diminishing returns; while positioning can certainly continue to rise from these levels, the balance of price risk is now to the downside given the heightened probability of collective profit-taking driven pullbacks.
As Well As China’s plans to further build its SPR despite broadly slower Chinese refining activity, Alberta wildfires shut in some oil sands production and tighten Western Canadian crude markets, Hurricane Beryl implications shift bearish, and Ottawa, Edmonton, and industry spar on C-59 “anti-greenwashing” provisions.