The most important fundamental development of the week, in our minds, is the evolving market share battle among OPEC + Russia. Saudi Arabia sold a spot-market cargo to China early this week for the first time in recent memory, Iraq’s southern exports have reached a record high, forecasts for 2Q16 OPEC output are rising and rhetoric regarding coordinated output cuts was bearish. The cultural and strategic differences between major exporters are clearly not being mended by +15 months of sinking FX reserves and revenues; the battle for market share is alive and well.
In the U.S., weak DOE stats halted recently bullish trends of tightening Cushing stocks and steady growth in refinery inputs and mogas demand. Cushing also registered its largest w/w build since December of 1.75m bbls. Refining margins have improved but remain at their weakest seasonal levels in