For the second straight week, the main oil futures contracts have seen a marked rejuvenation in open interest, primarily coming from bullish long positions, OilPrice reports.
This suggests that, despite ongoing fears of an economic recession, traders believe that the selloff earlier this month was overdone. This has also translated into the markets largely ignoring the return of Libyan oil. In addition, Europe’s natural gas woes have strengthened demand prospects for middle distillates, with diesel switching in the winter months now a very real possibility. With the Brent-WTI spread as wide as ever, ICE Brent has been flirting with the $107 per barrel mark in today’s trading session.
The spread between the world’s two leading crude benchmarks, Brent and WTI, is as wide as it has been in more than three years, moving as far as $8.50 per barrel recently. Previous strength in WTI has been tangibly beaten down by weakening gasoline demand and several consecutive stock builds. While Europe has plenty of its own demand problems, the strength in the prompt months is still there, with the 1-month ICE Brent spread surging to an all-time high of $5 per barrel today. US crude exports have seen a substantial drop compared to record highs seen in April-May, but the wide Brent-WTI spread will provide a huge boost to European buying of the American benchmark.
Mexico maximizes fuel oil exports to the US. Exports of Mexican fuel oil to the United States rose to the highest level on record in H1 2022, averaging 5.3 million barrels a month, as higher residue output has been met with increased US demand.
Less than one week after the Tripoli government lifted the blockade of oil ports and infrastructure, production rates in the country have surged above 1 million b/d, almost doubling month-on-month.
Proving that OPEC+ has been facing difficulties in ramping up new production capacity, the oil group’s underproduction rose to a whopping 2.84 million b/d in June, bringing the overall compliance rate to a staggering 320%.
/OilPrice/