Oil Context Weekly (W28)
Crude prices suffered their first weekly loss in more than a month despite continued hot money inflows while term structure strengthened and provided a firmer and bullish countersignal.
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.
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Summary
Flat Prices notched their first weekly decline in more than a month, with prices slipping roughly $1.50/bbl to end the week near $85/bbl Brent.
Futures Curves strengthened, ending the week in steeper backwardation and painting a very different and more bullish picture that beleaguered flat price declines.
Inventories data was mixed but leaned bullish with US and European stock builds broadly rolling over into seasonal draws and Singporean stocks sinking dramatically lower.
Refined Products remain under pressure as diesel crack spreads continue to ease and gasoline remains reasonably subdued despite what should be a seasonal high point for demand.
Investor Positioning data was especially concerning this week as it showed speculative participants continued to serve as net-buyers of crude contracts over the past week despite prices falling over the period in question, meaning that there was greater non-speculative selling pressure and we’re now left with an ever-larger positioning overhang while still at a lower flat price level.
As Well As the widening gap between demand expectations for next year, Hurricane Beryl makes landfall in Texas leaving power losses and refining disruptions in its wake, new carbon capture investments in Canada’s oil sands, intensifying wildfire blazes around key Canadian oil sands production regions, and the US tries again to find crude oil to refill its Louisiana SPR site.