Oil & Iran War Context Weekly (W24)
Crude prices sank to the lowest weekly close since February on the back of a whiplash shift from missiles flying across the Gulf to what most parties are now presenting as an imminent MOU-signing.
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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For even more context, check out my NYC video appearance with Paul Sankey (video, go Knicks!) as well as my comments to the Financial Times (print).
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Summary
Flat Prices sank $6/bbl on the back of the most optimistic torrent of MOU-optimistic headlines since April and Brent crude finished at its weakest since the beginning of the Iran War (around $87/bbl); Brent traded as low as $85.80/bbl in earlier Friday trading, also the lowest intraday tick of the Hormuz Crisis and exceeding, even, the steep mid-April selloff.
Timespreads continued to weaken alongside flat prices, with prompt spreads of all major benchmarks slipping tightly from around $2–3/bbl to $1–1.50/bbl; despite plunging inventories, crude term structure remains the strongest counterargument to ongoing, acute supply tightness.
Inventories data leaned bullish given large stateside crude draws and a continued sharp rout in Singapore that furthered last week’s collapse and brought fuel stocks to their lowest level since 2013; these draws were blunted, only somewhat, by a crude-driven build in ARA European stocks.
Refined Products markets saw gasoline crack spreads rise amidst still-precariously low US stocks and diesel margins fade alongside crude on Iran MOU optimism.
Market Positioning data again confirmed broad selling of crude oil futures and options by speculative participants; the net speculative position as a share of total open interest across the six largest crude contracts fell to the lowest level since mid-February, when Brent crude prices were more than $20/bbl lower.
As Well As kinetic-to-diplomatic whiplash; do we actually have an MOU deal?; cash is king; measuring the Hormuz “leak”; and my NYC trip reflections on current sentiment.