Physical crude softer, Russia risk to remain
Commentary Summary:
– US data may be finally beginning to reflect some sustained build-up in crude inventory.
– With global runs returning it seems a good time to short bloated cracks, but persistent threats to Russian ports make this trade ill-advised yet again.
– E/W spreads’ impacts on arbs are also defying certain logics, with a hugely wide Sing 10 E/W not enough to point diesel West.
Unless we get a Ukraine deal over the line (and that probability seems low for now), it will take a big build-up of OECD inventory, particularly crude, to stop flat price & spreads from reacting strongly to each new headline over Russian infrastructure attacks.
We need the market to be convinced that enough supply is coming to market to overcome one or more Russian ports being out of action at length.
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