News

European Window: Brent Slides to $73.66/bbl

The Feb Brent Futures contract has seen mixed price action this afternoon, trading up to a high of $74.12 at 16:10 GMT before retracing to $73.61/bbl where it sits at the time of writing, as EIA data highlighted that crude inventories fell by 934kb to 421mb in the week, compared with analysts’ expectations in a Reuters poll for a 1.6mb draw. In headlines, Saudi Arabia’s crude oil exports rose to a three-month high in October, reaching 5.92 mb/d, up 174 kb/d from September, according to JODI data. Despite the increase in exports, crude production slightly declined to 8.972 mb/d as the Kingdom adhered to its pledge to produce “around 9 mb/d.” Meanwhile, Barclays downgraded the energy services sector from positive to neutral, citing a bearish oil macro environment, limited investor capital influx, and potential risks to 2025 earnings. The sector, after three years of double-digit growth, is now experiencing a mid-cycle spending plateau. At the time of writing, the front (Feb/Mar’25) and 6 month (Feb/Aug’25) Brent Futures spreads are at $0.38/bbl and $1.64/bbl, respectively.

Overnight & Singapore Window: Brent Rises to $73.70/bbl Levels

The Feb Brent Futures contract saw renewed strength in price action this morning, steadily rising from $73.28/bbl at 07:00 GMT to trade at $73.70/bbl at the time of writing (10:20 GMT); API statistics highlighted a moderate draw in crude by 4.7mb to the week ending Dec 6th , contrasting analyst expectations of 1.85mb. In headlines, QatarEnergy has reportedly increased the price of its al-Shaheen crude oil blend for February loadings, reflecting strong demand. According to Reuters, the price will be $1.05 per barrel above the Dubai benchmark, up $0.32 from January loadings. The company has already sold three cargos at premiums ranging from $0.90 to $1.05 per barrel. This move contrasts sharply with Saudi Arabia’s recent price cuts for key Asian markets, including a reduction for January loadings. Meanwhile, India’s Bharat Petroleum Corporation Limited (BPCL) plans to boost its refining capacity by 10 million tons annually by 2028, increasing from 35.3 million to 45 million tons per year, to meet rising demand, according to BPCL’s refining head Sanjay Khanna, reported by Reuters. At the time of writing, the front (Feb/Mar’25) and 6-month (Feb/Aug’25) Brent Futures spreads have narrowed slightly to $0.34/bbl and $1.58/bbl.

European Window: Brent Falls Below $73/bbl

The Feb’25 Brent futures flat price came off from the $73.20/bbl handle on Tuesday afternoon. Price action fell to lows of $72.50/bbl before recovering to $72.88/bbl by 17:20 GMT (time of writing). In the headlines, the UK imposed new sanctions on two oil trading firms, 2Rivers DMCC and 2Rivers Pte Ltd, and 20 shadow fleet vessels to curb Russian oil revenues and disrupt its illicit oil trade. Oil has washed ashore tens of kilometres of Russia’s Black Sea coast after two aging tankers were damaged in a storm, and now a third tanker has issued a distress signal, heightening fears of a worsening environmental disaster. Saudi Arabia has successfully extracted lithium from oilfield brine and plans to launch a commercial pilot program led by Lihytech, showcasing its move toward alternative wealth sources amid rising global demand for battery minerals. Kazakhstan has downgraded its 2024 oil output forecast to 87.8 million tons, citing maintenance at the Tengiz oilfield, with production totalling 80.5 million tons from January to November. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.32/bbl and $1.41/bbl respectively.

Naphtha Report: A Light-End to the Year…?

The naphtha complex saw a strong start of the month before the buying in the East appeared overdone, and the propane and petchem market was also more tepid, although the naphtha market in Europe outstripped propane. The market in both regions corrected and has seen stronger selling in the cracks.

The Jan’24 NWE naphtha crack saw increased selling after an early December rally, with trade houses selling 458kb on Dec 10-12 before partially buying back to a total net short position of -4.5mb on Dec 16. Majors added 160kb to their net short position, now at 537kb, while spec traders hold 89kb long since early December. The Jan/Feb’25 NWE naphtha spread peaked at $3.75/mt on Dec 10 before falling to $2.25/mt on Dec 16 amid weakening European naphtha. Trade houses flipped positions, net buying 160kb to a total of 2.892kb, while banks added 356kb on Dec 2, bringing their net position to 667kb long.

Dubai Market Report – What goes up must come down

Brent/Dubai has continued its downward grind, with the M1 contract falling to its lowest level since July. The Jan’25 contract reached lows of $0.10/bbl on 17 Dec, while the entire forward curve has shifted lower in an orderly fashion. The contango in the Brent/Dubai boxes is very orderly, without any kinks on the curve (see appendix). The medium sour crude market has continued to tighten as OPEC+ delayed their output hikes to Q2’25. Despite buying some time and supporting flat prices, our global crude balance suggests a bearish picture for 2025, with OPEC+ possibly needing to defer their output hikes further.

Dated Brent Supplementary Report – Ice Cold Buying Beginning to Thaw…?

December has continued to see strong buying in the physical windows from a range of players, with 34 convergences so far in December. The main seller so far this month has been Equinor. Totsa has been a keen buyer of WTI Midland and has bought 18 cargoes out of the total number this month. There has been heavier selling in the past few days in the financial contracts, and there has been better selling interest and better selling in the new year weeks from trade players.

Overnight & Singapore Window: Brent Corrects to $73.37/bbl Levels

The Feb Brent Futures contract has seen mixed price action this morning, rising up to $74.10/bbl at 07:00 GMT before correcting down to $73.40/bbl at the time of writing (10:50 GMT). In headlines, two Russian oil tankers ran aground in the Black Sea near the Kerch Strait, separating Russia from Crimea as reported by the country’s emergency services ministry on Sunday. The damage resulted in oil spilling into the water and prompted an investigation by Russian authorities for potential criminal negligence, with the tankers reportedly carrying around 4,300 dead weight tonnes of oil each. Oil accidents caused by negligence are relatively common in Russia; last year, a similar incident occurred in the Irkutsk region when two oil tankers collided due to a captain operating under the influence of alcohol, spilling an estimated 60 to 90 tons of fuel into the Lena River. In other news, Chevron announced today that it has signed a deal with aluminum giant Alcoa to supply 130 petajoules of natural gas over a 10-year period starting in 2028. The gas will be sourced from Chevron’s Gorgon and Wheatstone LNG projects, which together have a production capacity of 530 petajoules. According to the announcement, Alcoa plans to use the natural gas to power its alumina refineries in Western Australia. The front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.37/bbl and $1.59/bbl respectively.

Onyx Alpha: All About Arbs

Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in fuel oil and distillates swaps. Our weekly Onyx Alpha report presents speculative and hedging trades based on technical analysis and data-driven tradecraft methods on Onyx Commitment of Traders (COT) and Flux Financials data.

European Window: Brent Supported Above $74/bbl

The Feb’25 Brent futures flat price traded within a 60c range on Monday afternoon. Price action reached highs of $74.30/bbl at 15:30 GMT before falling to $73.74/bbl at 16:30 and climbed to $74.11/bbl by 17:30 (time of writing). In the news, the EU has adopted its 15th sanctions package against Russia, targeting 52 new vessels from Russia’s shadow fleet, increasing the total number of such listings to 79. Shell and its partners will invest $5 billion in Nigeria’s Bonga North offshore oil project, expected to produce 110kb/d by the decade’s end, with 300 million barrels of oil equivalent recoverable from the area. According to a Bloomberg article, tanker rates for Middle East-China routes (TD3C) have fallen by a third this year due to weaker Chinese crude demand, driven by an economic slowdown, fuel-switching, and OPEC+ delays in restarting idled supply, impacting supertanker operators significantly. US SPR crude inventories rose by 0.5mb w/w to 393.0mb last week. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.38/bbl and $1.69/bbl respectively.

CFTC Weekly: Gasoline over Gasoil

In the week ending 10 December, money managers saw opposing sentiment in the crude futures benchmarks, as they got longer in Brent but shorter in WTI. Overall positioning remains bearish despite the delay in the OPEC+ output hikes as traders grapple with global economic uncertainty as Trump’s restrictive trade tariffs loom large. Bullish risk was focused on US gasoline (RBOB), while purchases of short positions in ICE LS Gasoil and ULSD Heating Oil accelerated, with net positioning in the latter reaching an all-time low.

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