The Nymex futures market weakened atthe start of the month. Non-commercialpositions fell into net short as longpositions were liquidated at a faster ratethan the shorts. Speculator net shortpositions widened nearly 7,000 lots to21,300 contracts. Moreover, open interestwas 8,500 narrower at 1,298,500 contracts.With options included, openinterest was 17,200 lots wider at2,362,400. The Nymex WTI front-monthcontract closed the first weekly period at$58.88/b to average $58.42/b on weatherrelatedand geopolitical issues.
In the second weekly period, the NymexWTI front-month contract closed at $59.06/b, averaging $58.84/b on continued weather-relatedand geopolitical concerns boosted by an upward revision to global demand expectations. Noncommercialnet positions were 14,100 lots firmer but remained net short by 7,200 contracts. Therise was on the back of gains in both sectors of contracts. Thus, open interest rose by 24,300 to1,322,800 lots, a record-high. Including options, open interest stood at a record-high of2,412,000 contracts or 49,600 lots wider.
In the third weekly period, noncommercialnet positions werefurthered by another increase of15,100 lots to turn net long by nearly7,900 lots with short positions falling ata faster rate than longs in both sectors.Hence, open interest fell 95,300 lots to1,227,500. With options included, openinterest plunged by a hefty 203,500 to2,208,500 lots. The Nymex WTIprompt month closed the third weeklyperiod down to $58.07/b to average$58.36/b on the forecast for warmerweather amid slowing demand forwinter fuels.
In the final weekly period, thesentiment firmed on revived geopoliticsand depleting gasoline and heating fuels amid refinery outages in the USA. The Nymex WTIrallied in the final week of February to $61.49/b to average $61/b. Non-commercial net positionswere some 18,200 lots wider at 26,000 contracts net long. The rise in net volume was attributedto non-commercial long positions while shorts were liquidated. However, open interest widenedby nearly 42,000 lots to 1,269,200 contracts. With options included, open interest was more than59,000 lots firmer at 2,267,500 contracts.
On a monthly basis, net non-commercials averaged 1,340 net long in February versus 9,000 netshort the month before and 18,700 lots net short last year. Commercial long and short positionsset record-highs of over 800,000 lots to stand net long by 14,500 lots. Open interest averaged1,279,500 lots for the month, some 700 lots below the previous month and 355,000 over the sameperiod last year. With options included, open interest averaged 78,500 wider at 2,312,600 lots or760,800 higher than last year. The Nymex WTI front-month average was $5.04 or over 9%higher at $59.39/b, yet 4% lower than last year.
The Forward Structure
The forward structure was firmer toremain below the $1 spread in contangofor the second month. The 1st/2nd monthcontango spread was at 81¢ or 18¢narrower, the narrowest since June. The1st/6th, /12th and /18th spreads were$3.20/b, $4.98/b and $5.51/b, or 45¢,89¢ and $1.17/b narrower respectively.When comparing the contango spreadto last year, the 1st/2nd month spread was42¢ firmer while the 1st/6th and /12thmonth spreads were 53¢ and 3¢narrower with no change against the18th month. However, US crude oilstocks averaged 326.2 mb in Februaryor 5.4 mb higher than in the previousmonth and 900,000 barrels over last year. Despite the higher crude oil inventory levels, a heftydraw on distillate and gasoline stocks prompted the narrowing of the forward structure.