The Brent futures flat price for the prompt contract has seen a sell off this morning, falling from highs of $76.48/bbl at 07:10 GMT to flirt with the $75/bbl barrier at 11:00 GMT, where it was only 2c above at $75.02/bbl, before getting spooked and retracing higher to $75.82/bbl at 13:00 GMT.
The Dangote refinery in Lagos, Nigeria, has received delivery of its first 1mbbls of crude oil, which will be followed by 5mbbls more in due course, to get the fully operational 650kbbls/d facility online. Upon receipt of the preliminary cargo, Dangote confirmed that the 1mbbls came from Agbami, one of Nigeria’s offshore fields, through Shell International Trading and Shipping Company Ltd. The next four shipments are set to be supplied by the Nigerian National Petroleum Corporation in the next “two to three weeks”, with the final of the initial cargoes provided by ExxonMobil. Chinese refiners’ demand for Saudi Aramco’s flagship Arab Light crude is at reported five month lows, on the back of players seeking cheaper supply due to the higher than expected prices set by Aramco, despite the price cuts last week.
Looking at the CFTC data for the week to Dec 05, in Brent futures we saw a more bearish outlook, with bulls removing length for the sixth consecutive week, decreasing by a little over 7mbbls. On the other hand, bearish speculators had a change of heart and added to their short positions, with the most weekly short positions seen put on since May, increasing by 19mbbls, representing a near 40% increase week on week. In turn, this decreased the long:short ratio to 3.04, the lowest level seen since October. WTI futures saw a similar trend, with 3mbbls of length removed and 13mbbls of short positions added, taking the long:short ratio even lower to reside at 1.45. Most notably for prod/merc participants in WTI futures, there was a significant risk-on approach in the week to Dec 05, with longs and shorts increasing by 17% and 21%, respectively. This marks the most significant surge in short positions in over a decade and the largest increase in long positions since Feb 2020.
The Feb/Mar spread remains comfortably in contango, with the front and 6-month Brent futures spreads at -$0.20/bbl and $0.04/bbl, respectively.
