Oil Context Weekly (W43)
Crude prices eased $2/bbl in their first weekly loss since the onset of the Israel-Hamas War, though traders remain wary of material directional exposure going into the geopolitically fraught weekend
I encourage you to check out my recent conversation with Tony Greer on the Oil Ground Up podcast, which aired moments ago here, in which we discuss ongoing geopolitical and sanctions developments in the oil market as well as the oil patch’s recent mega-mergers. I had a similar albeit much shorter video conversation with the Financial Post (here).
I also spoke with the New York Times about how the Biden Administration’s SPR policy has progressed over the past 18 months—the good and the bad.
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.
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.
Flat Prices jumped around through the ups and downs of war escalation concerns in the Middle East, range-trading between the low-$90s and high-$80s, with traders wary of assuming too much exposure in either direction amidst the heighted chance of big, geopolitical-driven sentiment shifts.
Futures Curve flattened and calendar spreads contracted largely in line with volatile, sentiment driven moves in flat prices; however, prompt spreads, which remain closest to spot market conditions, notably outperformed both flat prices and bellwether Dec/Dec spreads through Friday’s final rally.
Inventories drew modestly across the board, but the small decline in US stocks was a disappointment compared to the far larger API-reported draw the prior day.
Refined Products margins eased back just slightly, with diesel crack spreads weaker but well within their recent volatile range and gasoline cracks continuing to trade tightly around their lowest levels since the initial pandemic demand collapse.
Inventor Positioning data confirmed that speculators were net sellers of crude contract over the week through Tuesday, driven by fresh shorting activity rather than the trimming of long positions; spec positioning remains high vs the recent trend, tough is materially lower than late-September’s high-water mark.
As Well As the latest price-moving geopolitical developments in the Middle East, deeply contradictory Canadian carbon price policy developments, what mega-mergers mean for the oil patch, and key developments in the fate of Venezuela’s US-based Citgo refiner.