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—including our ongoing tracking of shipping flows throughout the Middle East.
Paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.
On the latest episode of the Oil Ground Up Podcast, I spoke with Rob Wilson, President of East Daley Analytics, for a deep dive into the rapidly changing North American oil infrastructure landscape. We discussed the latest resurrection of Keystone XL; whether Canada can realistically produce enough incremental oil to fill all the proposed capacity; the increasing competition between private-sector and strategic pipelines; and the return of Venezuelan heavy crude and if it poses a meaningful threat to Canadian barrels in U.S. refineries.
For more public oil market context, check out my contributions to TVO’s The Rundown (video) and Financial Times (print).
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Summary
Flat Prices rose nearly $9/bbl for Brent prompt futures to end around $105/bbl on the back of Houthi Red Sea advances and confirmed strikes on Saudi Arabia’s East West pipeline; Dated Brent soared $13/bbl to close above $120/bbl on Thursday for the first time since April.
Timespreads strengthened across the board, adding fundamental confirmation to the ongoing rally in flat prices; most of the term structure gains occurred on Thursday after news of the East-West Pipeline attacks and were, likely, driven by a precautionary demand bid for physical barrels.
Inventories data leaned directionally bearish with larger, product-driven builds in the US and Singapore and only a modest draw in ARA Europe; inventories of all major road fuels across all major importing regions remain extremely low, justifying historically-high crack spreads.
Refined Products continue to suffer from even tighter supply deficits than crude and diesel remains clearly the most desperately short-supplied; diesel futures have risen to the highest sustained level on record, with roughly half that price driven by crack spreads alone as the industrial workhorse fuel frantically—but, of yet, unfruitfully—searches for demand destructive pricing levels.
Market Positioning data confirmed that speculators were small net-buyers of crude futures and options contracts over the past week-through-Tuesday, though hot money flows differed materially between benchmarks: the net spec position in Brent rose slightly, WTI rose notably, and the spec position in Dubai contracts fell to their lowest level on record.
As Well As Houthis dramatically up the stakes for Saudi oil supplies and make material territorial gains to further threaten the Bab el-Mandeb Strait, confirmed strikes take Saudi Arabia’s East West-Pipeline offline, the latest tracking on Hormuz oil flows and renewed hopes for an Iran-Oman safe[r] shipping deal, and Dated Brent price hits highest level since April.