Heads up on crude.
When crude rose for a second day on Friday, it was something of a pyrrhic victory. Last week was the second straight week of declines and the worst week in two months (coming on the heels of the OPEC extensions no less).
Well this week is shaping up to be a different story and it’s notable. Brent jumped above $65 overnight for the first time in 2 1/2 years as the North Sea Forties crack has everyone feeling bullish all of the sudden.
“Yesterday’s closure of the Forties pipeline system for weeks is one of the most significant unplanned crude oil shortages we have seen this year,” PVM’s Tamas Varga told Bloomberg. Basically, it’s one of the most important pipelines in the world and this is going to take 2-3 weeks to repair. Brent’s premium to WTI blew out above $7/bbl today – it’s now the widest since May of 2015:
Needless to say, this has energy shares on the move. They led on Wall Street Monday and on Tuesday, the Stoxx 600 Oil & Gas just hit its highest level since early last month:
This is an interesting setup for the inventory data out of the U.S. today and tomorrow. Analysts forecast U.S. crude inventories drew to the tune of 2.9m bbl last week. Gasoline stockpiles forecast a 2m bbl build.
400000 bbl per day with some slternstive offloaded. A lot avtually. Short Brent right here.