Oil Context Weekly (W46)
Crude prices fall but Brent term structure firms as the market continues to battle to find direction amidst a flurry of headline risk and Trump policy handicapping.
Happy Friday, Oil Watchers!
Every week, I summarize and analyze 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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I spoke with Reuters about the unique vulnerability of Canada’s oil sector to US tariffs but that I still expected that Canadian crude would eventually be exempted. Read that full piece here.
I also spoke on a webinar hosted by the Canadian Global Affairs Institute on the energy policy under a second Trump term, some of the discussion from which got written up in part by the Canadian Press here.
Summary
Flat Prices fell nearly $3/bbl thanks to further Chinese economic pessimism and monthly IEA/EIA/OPEC oil forecast updates that all painted a comparatively less optimistic outlook.
Timespreads for Brent crude notably outperformed the pullback in flat prices, with Brent term structure regaining its normal premium above WTI after months of atypical WTI strength but both contracts notably weaker over the past few months as spot markets begin to slacken.
Inventories data was mixed this week between continued faster-than-seasonally normal draws in the US coupled with a large build in ARA Europe and a small build in Singapore; US gasoline stocks are getting extremely low, while European distillate stocks spiked.
Refined Products remain comparatively stable as the market continues to channel most of its macro uncertainties through crude prices, with diesel margins flat on the week and gasoline boosted by low US inventories.
Positioning data revealed that speculators were net sellers of crude contracts; while overall position levels remain low by the standard of the past two years, they’re more or less in line with the midpoint of the experience over the past two months and are increasingly likely to represent a balanced mean reversion risk, even if these levels would have looked deeply oversold in the context of last year’s market.
As Well As the latest oil market outlooks published by the big-3 oil-forecasting agencies, Trump stacking cabinet with oil industry proponents, and crackdown on Nigerian oil thieves prompts crude production turnaround.