Oil Context Weekly (W14)
Crude prices collapse on double-whammy of steep demand-hampering US tariff rollout and OPEC+ bizarrely leaning into tariff-induced weakness by announcing a tripling of May production increases.
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Summary
Flat Prices fell more than $7/bbl for the worst performance since last September; declines were driven by a rout in global risk assets following the rollout of steep tariffs by the Trump administration combined with the surprise announcement that OPEC+ would triple the pace of the planned production hike in May.
Timespreads held comparatively strong vs. the bloodbath in flat prices; while weakness crept into Dubai term structure following OPEC+’s surprise announcement on Thursday and all benchmarks weakened in Friday’s rout, all major contracts remain firmly backwardated with this latest pullback only bringing us back where we stood prior to last week’s strengthening.
Inventories data was split between draws in Singapore and ARA Europe vs. an acceleration of seasonal builds in the US.
Refined Products markets were relatively uneventful compared to the tumult in crude prices, but US gasoline also saw an early April runup rapidly unwound following the rollout of US tariffs.
Market Positioning data confirmed that speculators were again sizable net buyers of crude contracts over the past week-through-Tuesday, putting overall hot money positioning at modestly overboard levels heading into the “Liberation Day” shock and providing the initial kindling that quickly set fire to start the worsening blaze in crude prices through the end if the week.
As Well As Trump’s tariff tantrum roils markets, OPEC+ triples pace of May production hike, and crude price declines coupled with rising cost structure further slow US shale patch.