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Oil Context Weekly (W42)
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Oil Context Weekly (W42)

Crude prices continue to rise amidst multi-pronged escalation in the Middle East and the resultant return of speculative capital inflows, all occurring against a still-tight fundamental backdrop.

Rory Johnston's avatar
Rory Johnston
Oct 20, 2023
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Commodity Context
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Oil Context Weekly (W42)
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Happy Friday!

Every week, I summarize 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.

Become a paid subscriber today to get the full Oil Context Weekly report every Friday and join me in my hunt for ever-deeper oil & gas market context.

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Summary

Flat Prices gained a buck and change amidst escalating tensions in the Middle East and a continued flow of speculative cash back into crude contracts.

Futures Curve flattened at the front and steepened in the back, which likely reflects the fact that those speculative inflows are betting on tighter markets to come—despite unchanged, and even waning, spot market pressure.

Inventories data was bullish given the largest weekly US commercial petroleum draw since late-2021 that completely overwhelmed the smaller moves in Singaporean and European stocks.

Refined Products reversed their recent trend as gasoline crack spreads came up off their floor (from $4.50/bbl to $7.50/bbl) and diesel crack spreads eased back ($45/bbl to $40/bbl)—gasoline’s marginally bettered fortunes are coming on the back of a second week of US inventory draws.

Investor Positioning data confirmed that speculators were net buyers of crude contracts to the tune of 26.3 MMbbl in the past week through Tuesday, driven more so by short trimming than fresh long positions; further speculative inflows are suspected to have poured in over the latter half of the week.

As Well As further tragic and multi-pronged escalation in the Middle East, Venezuelan sanctions relief, and a fresh round of SPR repurchase announcements.

What Happened This Week

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