Oil Context Weekly (W41)
Crude prices took a step back following last week’s OPEC+ cut-fueled gains, while diesel margins hit fresh all-time highs
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Flat Prices fell more than $6/bbl week-to-date, sitting at just shy of $92/bbl as of writing. Crude prices ebbed and flowed, once again, with the US dollar—and the broader macro current—but the relationship was relatively weaker compared to the weeks running up to the last OPEC+ meeting. Overall, crude underperformed the US dollar’s choppy but relatively flat performance.
Calendar spreads confirmed the downward pressure felt in flat prices, with both the prompt spread and the bellwether Dec22/Dec23 spread falling through the week by roughly ~$0.50/bbl (2 to 1.5) and ~$1.50/bbl (13.50 to 12), respectively.
Inventories rose on a total petroleum basis across high-frequency surveys last week driven by a large crude build in the US, which more than offset the smaller draws in US refined products and net draws in both ARA Europe and Singapore; meanwhile, distillates (i.e., diesel) inventories continue to sound crisis-level-tightness alarms.
Crack Spreads for diesel rocketed higher to fresh all-time highs in New York Harbor—currently sitting at $82/bbl!—on the back of still-falling inventories, the ongoing French refinery strikes, and a malfunction at Europe’s largest refinery.
Positioning data indicated that hedge funds and other money managers remained net buyers through this past Tuesday to the tune of 35.1 MMbbl (+22.6 long, -12.5 short); the net position as a share of total open interest in the contracts rose to 8.8%, its highest level since late-June.