Brent futures finally found the momentum it had been waiting for, pointing to some calm in this poor-demand storm. Prompt Brent futures strengthened from $79.10/bbl on Jan 18 to $80.04/bbl on Jan 24, and hitting the $80/bbl mark two times this week.
However, it is like Brent futures has been resembling the cursed Greek Sisyphus these past few months, with the exception of the last two weeks. The contract found turbulent winds on top of its mountain as the boulder kept on rolling back down, consequently killing hope for eternal recovery. Although now, it seems like ‘Brent-syphus’ found support mid-way through its climb up, almost as if the contract was cheating death itself.
Spurred by a plethora of factors, including an ever-escalating conflict amid Houthi rebels being repetitively air-struck by American and British forces, the impact of the lack of Libyan oil despite the force majeure being lifted on Jan 21. On top of this, North Dakotan oil production was reduced on the back of freezing weather and loadings at the Ust-Luga export terminal in the Baltic Sea were suspended following suspected drone attacks. Other oil market fundamentals helping to mitigate Brent-syphus’s burdening lack of demand were the EIA draw of over 2.4mbbls announced on Jan 18 and the CFTC positioning continuing its upward trend with bulls adding over 5% of longs and shorts being reduced by over 2%.
The market will have to keep an eye on whether fundamental factors and financial flows will continue to prop up Brent-syphus on its ascent or if the looming question is just: how long until the boulder rolls back down again?
