It is 4Q versus 2024, supply deficit against economic malaise, the central bank of the oil world facing the central banks of the developed world.
Yesterday’s two decisive factors in shaping the mood of investors and the direction of risk assets were the Weekly Petroleum Status Report from the EIA and the interest rate decision from the Fed.
In hindsight, yesterday’s and this morning’s price action is reasonable and sensible.
Looking back at the performance of the past few weeks there is one salient question that needs to but cannot be answered instantly: are distillates going to sound the death knell of the current bull run or despite the violent nature of the contract(s) the move higher will continue unabated?
After the release of the updated monthly reports from the three most important forecasters we established that the last quarter of the year will see demand exceeding supply.
The major factor behind the latest run up in oil prices is undeniably the Saudi determination to draw down
If those with bullish propensity were looking for a gentle nudge or excuse to liquidate some of their lengths built up in the last 2-3 months, the inspiration came from a very disappointing set of US stock data.
Whilst the underlying risk is currently firmly skewed to the upside the daily activity in the oil market, it appears, is almost exclusively dominated by the perpetually changing view on the distillate/crude oil spread.
Oil steps into the morning firm but with an air of uncertainty as it faces a few days and news cycles that will have a great influence on its current destiny.
The major price driver in our market last week was the decision by the two OPEC+ heavyweights and now seemingly inseparable allies, Saudi Arabia, and Russia, to extend production/exports constraints totalling 1.3 mbpd until the end of the year.
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