What's Manufacturing Got To Do With It? | S6 E33

World of Oil Derivatives

Brent crude prices have had a strong week, continuing to rally at $87/bbl. The latest CFTC data indicates that the market has become balanced and neutral in positioning. This presents an opportunity for bullish investors to take action, with legacy positions and new entrants supporting this trend.

However, macroeconomic news doesn't fully support this bullish outlook. Economic data from China and the US is weak, with China's manufacturing sector contracting for the second consecutive month and service activity dropping to a five-month low. Additionally, central banks intervening in the bond market as yields hit all-time lows signal potential global economic challenges.

Regarding refinery margins, Martha raises a question: how far into the summer driving season must we go before the market reacts? Currently, refinery margins have increased by about a dollar, with crude and product prices also rising.

Gasoline prices remain unstable and sideways, suggesting the potential for shocks given the unusually low-price levels and poor liquidity. This instability might lead to gappy price action. Last week, RBOB saw the highest level of short positions by money managers in five years.

The team also discusses the big story of the week: Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) has initiated an investigation, demanding answers from the CEOs of 18 oil producers regarding potential collusion with OPEC to artificially raise prices for American consumers and increase federal government costs.

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/

James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/

Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/

Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/

Chapters for this episode are:

0:00 Welcome

0:28 Brent Futures

1:50 Macro market news

6:21 Refinery margins & products

15:14 China & US economic data

19:24 "Googling oil:" world oil news

23:22 Poll results

26:08 Global elections & the markets

29:20 Outro