Oil Context Weekly (W44)
Crude prices fall more than $5/bbl and the futures curve flattens as risks of Iranian escalation wane; meanwhile, Biden Admin's hopes for Venzuela's electoral commitments run into early headwinds.
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.
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Flat Prices fell more than $5/bbl, to roughly $85/bbl (Brent), amidst waning geopolitical risk assessments—the worst weekly performance since the onset of the Israel-Hamas war.
Futures Curve mostly validated movements in flat prices, with all key calendar spreads notably weaker and the curve notably flatter.
Inventories data was mixed but leaned bearish, with builds in ARA Europe and Singapore overshadowing a headline draw in the US, which itself was weaker than the headline figure suggested.
Refined Products continue to trade sideways, on a crack spread basis, amidst all the intrigue roiling crude prices, although the prospect of additional distillate exports from Russia and China continues to exert pressure on diesel margins.
Investor Positioning data confirmed the largest speculative liquidation since the week preceeding Hamas’ attacks in Israel, in which crude shed $11/bbl for the worst weekly performance in almost a year; positioning risk is now tipping back to the upside as the net spec position falls below 7% of total open interest.
As Well As easing tensions with Hezbollah (and thus Iran), thinking about geopolitical risk premia, early headwinds the Biden Admin’s hopes for freer and fairer Venezuelan elections, US SPR repurchase threshold back within reach, and production rebounding in OPEC’s lagging African members.