Lacking a spark, continued rangebound prices in Brent. We are looking for the front month Nov’24 contract to finish the week between $70-75/bbl as we fail to see any reason for Brent to break out of this rangebound regime. This
Nov’24 Brent futures contract was volatile this morning, trading at $75.03/bbl at 07:00 BST and dipping down to a low of $74.25/bbl at 09:45 BST, before climbing up to $74.64/bbl at 11:25 BST (time of writing). In the news today, Israel has unleashed it most widespread wave of airstrikes on Lebanon, and warned citizens to evacuate areas near Hezbollah posts, according to Reuters. Israeli Defence Minister Yoav Gallant said today that the country is “deepening our attacks in Lebanon” and will continue until “we achieve our goal to return the northern residents safely to their homes”. In other news, Shell is preparing to shut in oil production at two of its platforms in the US Gulf of Mexico, Stones and Appomattox, as a tropical disturbance may cause a potential impact on their operations. Meanwhile, a port strike in the US looms on the horizon, threatening a potential supply chain crisis and increasing prices. Finally, China’s newest 400kb/d refiner Yulong has started up their crude unit and Libyan oil exports have rebounded above 700kb/d, according to Bloomberg, despite the ban on exports by Libya’s eastern government. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.77/bbl and $1.92/bbl, respectively.
The Nov’24 Brent futures price inched up this afternoon from $74.59/bbl at 12:00 BST to $74.76/bbl at 17:30 BST (time of writing). In the news today, Russia has boosted its use of sanctioned tankers to export oil, demonstrating the country’s continued success in defying US and EU restrictions. Six oil tankers sanctioned by the UK, EU, or US, loaded oil cargoes from Russia in August and September, as per data compiled by Bloomberg. Furthermore, at least 17 tankers, the majority owned by Sovcomflot, have been reported leaving Russian ports with crude oil since the end of April. In response, the US has asked at least one shipping insurer for information on 14 companies it suspects violated sanctions on Russian crude oil. In other news, India’s August crude oil imports rose 6.4% y/y to 19.9 million tons, up the most since May according to data published by the Indian oil ministry’s Petroleum Planning & Analysis Cell. Finally, TotalEnergies is set to develop $9 billion worth of oil resources in Suriname, reportedly ordering a hull for a 200 kb/d production vessel. Crude oil discoveries In Suriname have opened access to some 2.4 billion barrels in reserves, Wood Mackenzie analysts estimated. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.81/bbl and $2.14/bbl, respectively.
In high sulphur fuel oil, we saw some greater strength in the European HSFO complex. The Oct’24 3.5% Barges crack climbed from -$13.55/bbl on 2 Sep to -$9.05/bbl by 19 Sep, fueled by trade houses adding 535kb of longs and hedge funds boosting their position to a net 158kb. The HSFO E/W spiked to $18.00/mt on 9 Sep but dropped to $5.00/mt by 19 Sep, as hedge funds added 171kb of shorts and trade houses liquidated 850kb of shorts before flipping long on 18 Sep. The Oct’24 Visco increased from $9.50/mt on 6 Sep to $12.50/mt by 12 Sep, driven by strong physical demand. End users were buying Oct’24 Visco, while trade houses sold but turned long on 19 Sep. Bullish sentiment also boosted Oct’24 Sing 180, with trade houses buying Oct’24 and Oct/Nov’24, while funds sold Sep/Oct’24.
Finally, some strength! At the start of the week, we forecasted that the front-month Brent futures contract would tick slightly higher through the week, but ultimately remain rangebound between $71-74/bbl. As of 20 Sep, 11:50 BST (time of writing), the
Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing). In the news today, data from the General Administration of Chinese Customs stated that Chinese crude imports from Malaysia surged 31% (1.77 mb/d) y/y in August, making it China’s second-largest supplier after Russia. Furthermore, Malaysia serves as a major international terminal for crude oil shipments and has been allegedly linked to transportation of sanctioned Iranian and Venezuelan crude oil throughout Asia. In other news, after Hezbollah leader Hassan Nasrallah’s speech yesterday vowing to retaliate against the pager explosions, the conflict escalated further last night as Israeli warplanes carried out more than 52 airstrikes in southern Lebanon. In response, the Hezbollah chief stated this latest attack could be “a declaration of war”. Finally, Kazakhstan’s Karachaganak oilfield says it cut oil output from 5-9 Sep due to maintenance and is set to run another round of maintenance on 23-28 Sep. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.85/bbl and $2.06/bbl, respectively.Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing).
The Nov’24 Brent futures contract showed volatility this afternoon but ultimately strengthened from $74.30/bbl at 12:00 BST to $75.67/bbl at 17:15 BST (time of writing), indicating a possible continuation of recent bullish sentiment. In the news today, ING, the largest bank in the Netherlands, has stopped funding upstream oil companies that continue to develop new field licenses. This halt in financing serves as part of the Dutch bank’s 2024 policy to tackle climate change and aid the country’s transition into a low-carbon economy. In other news, Tokio Marine Kiln (TMK) have set up insurance for ports to provide cover against trade disruption such as Houthi attacks in the Red Sea and risk of strikes at US terminals. According to Reuters, the insurance policy offers cover up to a limit of $50 million per incident and states there are no geographical limits as to where the disruption event may take place. Finally, sources told S&P Global that China’s Huaxing Petrochemical refinery is still operational despite bankruptcy, producing a total 140 kb/d. However, the 100 kb/d Zhenghe Petrochemical refinery, also declared bankrupt, now remains offline. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.82/bbl and $2.11/bbl, respectively.
The Fed has initiated the rate easing cycle, lowering its key overnight borrowing rate by 50 bps. To be sure, it was an aggressive start and underscored the Fed’s concerns surrounding employment, in contrast to its sanguine views on inflation.
After the Nov’24 Brent futures contract came off yesterday evening following the Fed’s 50 bps rate cut, flat price strengthened his morning, trading at $73.94/bbl at 07:00 BST and moving up to the $74.35/bbl handle at 11:30 BST (time of writing). The Fed cut signals the start of easing and has fostered expectations of possible stronger future demand for crude oil. In the news today, Saudi Aramco has awarded a $2 billion deal to Italian engineering group Saipem as part of the expansion of the Marjan offshore field in Saudi Arabia, expected to provide a 300 kb/d boost in production capacity by 2025. In other news, analysts at Citi stated Brent crude prices in Q4 could be bolstered by demand possibly outstripping supply in the near-term and suggested that prices could have temporary support in the $70 to $75/bbl range. However, Citi remains strong in its view that Brent is set to decline to around $60/bbl in 2025. Finally, following the explosion of thousands of Hezbollah pagers in Lebanon earlier this week, other devices including radios, laptops and even solar power cells have detonated, injuring a total of 450 people and killing at least 20, according to Al Jazeera. Israel has yet to comment on the explosions meanwhile Hezbollah leader Hassan Nasrallah is due to give a televised address at 15:00 BST today. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $1.92/bbl, respectively.
In addition to our regular Monday CFTC COT analysis report, Onyx Insight will publish its own in-house CFTC COT forecast ahead of the official Friday report. The model forecasts changes in long and short positions using machine learning, utilising Onyx’s proprietary data.
