Oil Context Weekly (W37)
Crude prices continued their bull run, up another $3+/bbl this week to fresh YTD highs, fundamentally supported by a steepening futures curve with the pace quickened by an influx of speculative cash.
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Summary
Flat Prices rose another $3+/bbl with Brent topping out at over $94/bbl and WTI closing above $90/bbl for the first time in nearly a year.
Calendar Spreads widened materially, validating flat price gains and confirming the increasingly tight physical market underlying these market moves; prompt calendar spreads experienced an exceptional rally on Friday.
Inventories data was bearish across the board this week, with a sizable build in the US (+10.4 MMbbl) joined by smaller builds across ARA Europe (+0.2 MMbbl) and Singapore (+0.4 MMbbl); total European and Singaporean stocks continue to scrape the bottom of their respective seasonal ranges, while total US stocks look more comfortable overall.
Refined Products remain volatile and refining margins for key fuels ended flat-to-down; still, diesel crack spreads remain exceptionally strong at ~$50/bbl and, when coupled with concurrent crude gains, put the price of a barrel of diesel north of $140/bbl today in New York Harbor.
Positioning data confirmed that speculators were net buyers of crude contracts to the tune of 50.3 MMbbl last week-through-Tuesday. As a share of total open interest, the net spec position now sits at 9.8%, the highest reading since November; this is clearly into overstretched bullish territory, which puts the near-term tactical positioning risk squarely to the downside given the risk that these speculators bolt for the exit.