In this weeks Futures report, technical indicators were slightly more bullish in the past week in Brent, Gasoil and RBOB with prices generally seeing an upward trend and the RSI’s overall around or above 50. Notably, open interest in Brent saw a 10% decline in the week which highlights how the market is looking to take a more risk-off approach until the macroeconomic picture becomes more clear. We would also be cautious of a potentially saturated long market in RBOB with OI looking to have reached a plateau and both long and short money managers seen closing out of positions in the week.
The correlation between gasoil and other products saw notable changes in the week, becoming more positively correlated with HO and RBOB as the macro landscape evolved and supported products higher.
The WTI/Brent spread widened in the week and going forward, exports will be key to watch. The more risk-off sentiment was further highlighted by the easing of prices in the forward curve. Notably, the more recent weakness was concentrated at the front of the curve with the May/Jun/Jul fly falling into negative handles while the Jun/Sep/Dec fly also came off albeit at a more muted rate.
Looking at CFTC data for the week to March 5th, we saw short managed by money positions increasing for the third consecutive week though bullish interest declined by over 19mbbls.
ETF flows were very mixed in the week, especially the UCO and SCO. Notably, both the USO and UCO saw very bearish flows on the 6th of March, potentially on the back of continued builds in US crude stocks which saw six consecutive weekly builds.
Refinery margins came off over 22c/bbl in the week, largely on the back of stronger crude though notably, weaker EBOB and gasoil also weighed heavily on profit margins.
The USD was weaker last week which as a consequence saw the EUR/USD push past several thresholds. This weakness gave notable support to Gold with levels surging to record highs.
