Technical indicators for the current period highlighted similar trends across product groups. Brent’s RSI has been hovering around overbought territory, with price action oscillating around the $90/bbl mark throughout the week. Gasoil has seen a significant increase in open interest, now above 112mbbls in June. Price action has levelled out a little from the significant drop we saw last week, and this has been replicated in the crack, potentially signalling there has been better buying at these very low prices. RBOB’s Bollinger bands have continued to narrow w-o-w indicating a downturn in market volatility, as prices gained stability around the $2.70/gal level.
Looking at the correlation matrix, products experienced similar price actions, with RBBR reaching $25.70/bbl before softening, while the gasoil crack correlated closely with the heating oil crack, reflecting weak demand amid a reported build in distillate inventories according to the EIA report on Mar 10.
The WTI/Brent spread continued to widen week-on-week with levels at their lowest in the past four weeks. Brent structure remained consistent this week, mirroring the prior week’s forward curve, albeit slightly weaker in the front months.
ETF flows: All 3 ETFs saw a mixed flow, day on day, through the week although the bearish flows into the USO and UCO were greater. A great deal of this bearish momentum came from selling calls, indicating players’ neutral to bearish outlook.
Refinery margins weakened by 23c to $7.11/bbl on Apr 12. Gasoil continued weakening and unexpected builds reported by the EIA, while EBOB saw a week-on-week increase and HSFO and VLSFO components weakened notably due to lack of support.
Over the last five trading sessions, the US dollar surged, driven by stronger-than-expected US inflation data, propelling USD/JPY to new highs since 1990, while pressuring EUR/USD and GBP/USD to five-month lows, exacerbated by ECB’s dovish stance and heightened Middle East tensions.
