Oil Context Weekly (W29)
Crude prices and term structure weakened despite a spate of drone attacks on Iraqi Kurdish oilfields and the latest round of EU sanctions against Russia—but diesel still managed to end higher.
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Summary
Flat Prices fell ~$1/bbl for Brent to finish the week around $69/bbl, marking the barrel’s first weekly decline with the late-June pullback from the height of the Israel-Iran risk.
Timespreads weakened for the first time in a month, with near-dated timespreads for all major benchmarks flat-to-easing across the board following a weeks-long steepening rally.
Inventories data were mixed between a large headline build in the US, a modest build in ARA Europe, and a draw in Singapore; diesel stocks across all major hubs remain low or drawing rapidly while other lighter fuels, like gasoline, are beginning to rise above seasonal levels.
Refined Products markets remain dominated by ever-stronger middle distillates like diesel and gasoil, crack spreads for which rose again this week despite a broader weakening of the petroleum complex.
Market Positioning data confirmed that speculators were sellers of crude contracts over the past week-through-Tuesday, with their aggregate position slowly drifting lower since the height of the Israel-Iran panic; however, at current modestly oversold levels, sharp positioning-driven price risks are tilted to the upside.
As Well As Baghdad-Erbil deal paves way to pipeline restart amidst drone attacks on Iraqi Kurdish oilfields, EU announces new energy sector sanctions on Russia, and Hess wins over ExxonMobil in Guyana Arbitration and finalizes sale to Chevron.