Oil Context Weekly (W20)
The barrel heads higher on US-China trade optimism, then lower on renewed US-Iran deal concerns, before recovering once again alongside stronger term structure on Friday.
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Summary
Flat Prices gained just less than $1.50/bbl on the week but the barrel traded higher on Monday and Tuesday on continued US-China trade thawing (to nearly $67/bbl), then lower (to less than $64/bbl) on Iran deal headlines, before settling just north of $65/bbl.
Timespreads strengthened overall as Brent and WTI prompt futures spreads as well as Brent CFDs added ~15c/bbl, though Dubai crude saw structure weakened slightly; while prompt structure is recovering, broader crude futures curves remain in contango beyond the first few monthly contracts.
Inventories data leaned bearish given a return to more-seasonal builds in the US—though key refined product levels remain low—and a large build in ARA Europe (more than compensating for a small headline draw in Singapore); US diesel stocks, in particular, saw another week of large draws that set fresh half-decade (seasonal) lows.
Refined Products markets perked up when US diesel crack spreads popped $3/bbl higher to briefly breach $27/bbl before pulling back on Friday; gasoline margins continue to strengthen into driving season and high-sulphur fuel oil cracks remain exceptionally strong.
Market Positioning data confirmed that speculators were modest net-buyers of crude contracts over the past week-through-Tuesday, though levels remained oversold amid broad-though-yet-unrealized bearish sentiment; However, any glut has yet to arrive and these flows still represent a bullish tailwind for the barrel given the likelihood that net speculative positioning continues to drift higher from here.
As Well As potential US-Iran nuclear deal interrupts crude rally, updated agency forecasts edge demand outlook higher on stronger OECD coming off post-tariff chaos lows, Petrobras workers’ strike threatens to derail recently robust Brazilian supply gains, and Nigerian pipeline bursts for second time in two months and threatens Bonny Light exports.