The Brent futures flat price for the prompt contract has seen a sell off this morning, falling from highs of $77.39/bbl at 06:55 GMT to $76.08/bbl at 10:00 GMT.
Goldman Sachs group has cut its Brent forecast for 2024 by $10/bbl, to see it average around $81/bbl, hitting a peak of $85/bbl in June. Shipping firms, including MSC and A.P. Moller-Maersk, announced that due to the increased risk of assault from Houthi militants on commercial vessels in the Red Sea, they would look to avoid the Suez Canal. Russia has suspended more than 60% of Urals loadings because of a storm and scheduled maintenance on Friday. US crude exports have increased by 0.5mbbls/d from last year’s record to average 4mbbls/d so far in 2023. Medium sour crude oil from the Middle East plummeted to trade at a discount of $0.70/bbl to the Dubai Benchmark into the end of last week, amid weakening Chinese demand and a spike in prompt supplies.
Looking at the CFTC data for the week to Dec 12, in Brent futures we saw a continuation in bearish sentiment, with bulls removing length for the seventh consecutive week, decreasing by a little over 14mbbls. On the other hand, bearish speculators added to their short positions for a second week in a row, with the greatest weekly short positions seen put on since Mar’22, increasing over 35mbbls, representing a 52% increase w-o-w. In turn, this decreased the long:short ratio to 1.85:1.00, the lowest level seen since May. WTI futures saw a similar trend, with 12mbbls of length removed and 5mbbls of short positions added.
Spreads remains in contango up until June with the front and 6-month Brent futures spreads at -$0.23/bbl and -$0.47/bbl, respectively.
