The Aug Brent Futures flat price initially saw a steady afternoon trading between $78.60/bbl and $79.00/bbl. However, this was not the case after 16:00 BST, where we saw a rally up to an intraday high of $80.05/bbl at 17:20 BST. As expected, we saw the ECB cut rates today by 25bps to 3.75%, the first time rates in Europe have been under 4% since September last year. Markets are expecting one further rate cut from the ECB later this year despite some lingering signs of inflation. Denmark quickly followed suit with a rate cut of its own to 3.35%. Hungary has defended its position on using Russian gas imports despite pressure from the West to do so. Given Hungary’s dependence on Russian gas, importing 4.5 billion cubic feet of gas per year, it has been less able to cut this relative to the rest of Europe. Although, they appear reluctant to do so anytime soon with Hungarian Foreign Minister Peter Szijjarto suggesting “It is impossible to ensure Hungary’s energy supply without Russian energy”. Finally, we may see US refiners retreat from their flat-out production attitude thus far, if prices remain around current levels we are likely to see no production growth to mid-2025. The Brent front and 6-month spreads are $0.39/bbl and $2.46/bbl, respectively.
