Oil—And OPEC—Context Weekly (W49)
Crude prices fall despite—or perhaps because of—OPEC+'s new, multifaceted production deal that delayed the start of cut easing and lengthened the future cut easing window.
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.
The bulk of this week’s Oil Context Weekly report walks through my reaction to yesterday’s OPEC+ meeting and the resulting multifaceted deal that the group announced, in addition to my regular tracking of weekly market data and trends.
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Summary
Flat Prices fell by just shy of $2/bbl to nearly $71/bbl despite OPEC+’s new and improved, multifaceted deal, at the bottom of its months-long range.
Timespreads ended largely unchanged—or, in another framing, modestly outperformed flat prices—which continues to point to a less exciting physical market than the headline-driven chop driving flat prices.
Inventories data was mixed, split between a 4.7 MMbbl draw in the US, a 1.1 MMbbl build in ARA Europe, and a tiny 0.1 MMbbl build in Singapore; in the US, crude returned to draws and stock levels continue to hug the very bottom of their seasonal norm.
Refined Products were split between a bounceback in gasoline crack spreads and a continued decline in diesel margins.
Investor Positioning data revealed that crude speculators were net buyers of paper barrels, lifting their net position as a share of open interest across the two largest crude contracts to its highest level since early October heading into the OPEC+ meetings, the unwinding of which likely helps explain this week’s pullback absent any barn-door-blowing announcement from the producer group.
As Well As how I’m interpreting the new, multifaceted OPEC+ deal (from the delay to welcome lengthening of the cut easing window) and Canada is reportedly considering retaliatory export tariffs on shipments to US even if Canadian energy avoids US import tariffs.