evening wrap, june 24

market vibes

Angolan crude is selling at the biggest discounts in more than a decade

If a single line of news on Wednesday could sum up the markets in NY, it is this: “Key parts of the oil market are suddenly awash in supply, as a stream of cargoes out of the Strait of Hormuz accelerates after the US-Iran agreement to open the waterway.” (Bloomberg).

Metals, crypto, grains, lumber, orange juice and other commodities and WTI of course and products …all fell apace, most of them making fresh 2026 lows.

in the markets

The DOE reported one of the smallest net draws in combined petroleum inventories since the war began at just 1.1 mm barrels. Even though crude stocks fell 6.1 mm bbls, the WTI August/September front spread fell to a new post-February 28 low of $0.30 backwardation and … the Brent August/September front spread settled negative $0.13 contango.

Brent August/September front spread

I think the collapse of crude curves means oil leaving the SOH is being hedged in ICE and NYMEX futures and… if there are 20 or 30 VLCCs headed to the LOOP and Houston, US refiners NEED low inventories to receive these foreign barrels.

The EIA says US commercial crude inventories are precisely where they were a year ago after 4 months of the SOH being closed and weeks of red hot refinery runs.

August WTI flat prices closed under the 200 D MA for the 1st time since January 23 at $69.90 with a low of $69.30. Volume was moderate and the sell off was orderly.

July silver traded as low as $55.85.