Volatility deterrent

Crude prices remained volatile, with an intraday correction of 3%, to end up gaining back most of it, at 72 $/b for the February ICE Brent contract. Oil-specific volatility remained markedly above equity volatility, which has usually moved in tandem during episodes of expected downward demand revision akin to the one we are experiencing. The depressed price outlook should persist, as long as volatility remains elevated, and time spreads continue to correct to the downside, with 6-month prompt time spreads at 2.6 $/b, from 6 $/b at its peak in early November. OPEC’s meeting, likely held on Thursday, will continue to support oil volatility, as the outcome appears more uncertain than ever, given the lack of scientific data around the omicron variant.

Looking at data releases, the API survey reported a build in refined product inventories of 3 mb and a drop in crude oil inventories of 0.75 mb. In Japan, run rates are creeping higher, while commercial inventories dropped by another 4 mb w/w. Kerosene stocks are now ready for the winter, as the stock reached 17.7 mb as of last week.

Share this news :
Share on twitter
Share on linkedin
Share on email

You might also read :

May 17, 2022

Mixed price evolution

European gas prices were mixed yesterday, torn between conflicting fundamentals. Russian flows dropped yesterday, averaging 221 mm cm/day, compared to 225 mm cm/day on Friday.…
May 20, 2022

Lower credit rates in China

The yo-yoing continues on the markets: after a new decline in the equity markets yesterday and a sharp drop in long term rates (10 years…
March 30, 2022

Hopes for peace but what about sanctions?

Markets reacted strongly yesterday to Russia’s announcement of a significant reduction in military activity in the Kiev region. Many saw this as confirmation of progress…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Don’t have an account yet?  Sign up here!