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Oil market: week in review
Inching closer to US$100/b…
Brent continues to reach new highs, while WTI trails slightly further behind. Brent
ended the week up +5.7% at US$98.68/b, while WTI closed at US$91.60/b, a gain
of +4.1%. The week’s economic data continued to prove supportive for crude,
despite Friday’s announcement of a hike in the Chinese RRR. The Alaskan
pipeline outage provided a boost to prices as well, but was ultimately of minimal
consequence, and should be repaired in coming days. Spot correlations between
crude and equities was again nearly perfect, while currencies had a slightly lesser
(but still significant) effect. DOE data erred on the bearish side, with a headline
crude draw, but builds in product stocks, and a continuation of the recent
slowdown in demand. The CFTC report showed a large increase in noncommercial
net futures positions, while total open interest increased to a 38-
month high.
Equity markets had a strong week, reaching new 28-month highs on Friday, as
the outlook for the US economy continues to improve. The S&P gained +1.7%
w/w, to close just above 1293.
Looking forward, we are increasingly bullish, and find further justification for our
view in both the Brent futures curve’s strength, as well as nearly all incremental
s/d fundamentals data.
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