Spread vs outright
ICE Brent and WTI’s entire forward curve sold off yesterday by about 3$/b, as the whole commodity complex suffered from a continued rise of the dollar.…
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Yesterday oil benchmarks went up: ICE Brent traded 2.5% higher at $117.58/b. While, NYMEX WTI price moved up by 2.0% to $111.76/b.
A bullish factor was the final communiqué of the G7 meeting, in which leaders decided to work on a plan to cap the price of oil exported by Russia. The document is quite vague regarding real implantation of this cap: it simply mentions the idea to suspend “all services” allowing the seaborne transport of Russian crude and product when the price of the oil is above a threshold.
Another factor is the fact that Saudi Arabia and the UAE, two OPEC+ countries which are supposed to have significant spare production capacity could be closer to their production limit than expected. According to French President Macron who talked with President bin Zayed of the UAE, Saudi Arabia has around 150kb/d spare capacity (the IEA estimates the Kingdom has 1.7mb/d spare capacity) and the UAE does not have spare capacity (whereas the IEA estimates is 1.1mb/d).
Today the EIA should release its weekly report and also the report the agency did not publish last week due to technical issues. For now oil is trading slightly lower, à -0.6% for ICE Brent.