The Nov’24 Brent Futures contract was volatile this afternoon, trading at $72.77/bbl at 12:00 BST and oscillating up to a high of $73.85/bbl around 16:20 BST before correcting to the $73.15/bbl handle by 17:00 BST (time of writing). This volatility could be attributed to market players adjusting their positions, both in cautious anticipation of the US Fed rate cut this evening and in reaction to EIA data for the week ending 13 Sep, showing that US crude oil inventories fell by 1.63 mb and production was down by 100 kb/d. According to a Reuters poll, analysts had predicted a 500 kb decline in US crude inventories, indicating that last week’s Hurricane Francine may have caused a greater drawdown than expected. In the news today, Bloomberg has estimated that Russian crude oil revenues have dropped by 30% since June, largely due to international benchmark prices falling and depressing the value of cheap Russian crude. This decline in Russian crude comes despite the fact the country’s oil exports averaged 3.21 mb/d for the four weeks leading up to 15 Sep, 80 kb/d higher than the four-week average to the week of 8 Sep. In other news, as the market becoming increasingly divided on the Fed action, former Cleveland Fed President Mester has said today she favours a series of 25 bps cuts rather than a 50 bps cut. Whilst Fed funds futures predicted a 61% chance of a 50 bps cut, major brokerages now expect a 25 bps cut including Goldman Sachs, Nomura, and Deutsche Bank. Whichever move the Fed makes at 19:00 BST, either cut will likely cause further volatility in crude prices. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.76/bbl and $1.78/bbl, respectively.
