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Futures Report: Bear ATTACK

The Nov’24 Brent futures contract capitulated over the past week as bearish sentiment mounted. Prices fell by over 5% to their lowest level this year, only finding support at the $71-72/bbl level. Traders shifted their focus towards economic concerns, with the expectations of the resumption of Libyan supply and poor Chinese demand weighing on sentiment. Not even OPEC+ delaying their production hikes could reverse the tide as it confirmed the worsening demand outlook. Although futures market positioning is at historically short levels, there could be further room for prices to fall as the $70/bbl psychological support level looms large.

Brent Forecast: 9th September 2024

Brent crude futures saw a significant sell-off last week amid a weakening economic backdrop despite OPEC’s plans to delay its production hikes. The Nov’24 contract has stabilised at the $72/bbl level as of 09:00 BST (time of writing). While we

CFTC Weekly: Bears Claw Their Way Back

Money managers retraced from last week’s bullish positioning to incredible bearishness in the week ending 03 Sep. We saw long-positioned managed-by-money players trim over 32.6mb from their combined positions in Brent and WTI futures (-8.27%) while their short-positioned counterparts added over 73.2mb (+49.27%) their shorts in the benchmark crude futures contracts. This change took the combined long:short ratio for the crude futures to 1.63:1.00 this week, below the 1st percentile for long:short ratios for every week since 2013.

Overnight & Singapore Window: Brent trades around $71.50/bbl

The Nov’24 Brent futures contract has been quieter this morning, trading between $71.60/bbl and $71.90/bbl, but has since inched slightly lower to $71.50/bbl at 11:30 BST (time of writing).

European Window: Brent Plummets To $70.82/bbl

Nov’24 Brent futures flat price took a steep decline this afternoon, pricing around $72.70/bbl at 12:00 BST followed by a high of $73.50/bbl at 14:50 BST before plummeting to $70.82/bbl at 17:15 BST (time of writing). In the news today, Iran’s crude oil exports were reduced to around 3.3 mb/d last month in compliance with OPEC+ supply restrictions, compared to an output of 3.48 mb/d in July. The Iraqi oil ministry has said the country will maintain a reduced level of oil exports in coming months, according to Reuters. In other news, state-owned Saudi Aramco lowered the OSP of its Arab Light crude for buyers in Asia by 70 cents to $1.30/bbl, according to a price list by Bloomberg. Finally, Nigeria’s new upstream deal with Italian energy major Eni plans to boost its production output to 2 mb/d by the end of 2024, Nigeria’s Minister of State Petroleum Resources said. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.33/bbl and $0.88/bbl, respectively.

Fuel Oil Report – Sing 0.5% Rocket Launch

In high sulphur fuel oil, we saw significant weakness in the HSFO complex as reduced summer power generation demand weighed on sentiment. The conclusion of bitumen season may also be a contributing factor. The Oct’24 3.5% barge crack sold off to -$13.50/bbl by 2 Sep, and there was strong sell-side interest from trade houses. Meanwhile, the 380 East/West (Sing 380 vs 3.5% barges) saw a volatile performance over the fortnight and was marked by strong selling down the curve. Nonetheless, we noted end user buying interest.

Overnight & Singapore Window: Brent retraces below $73/bbl

The Nov’24 Brent futures contract has been more rangebound this morning, with the crude futures flat price rising to $73.20/bbl around 09:10 BST to then decline to $72.65/bbl around 09:40 BST to finally firm up to $73/bbl as of 11:20 BST (time of writing)….

Trader Meeting Notes: Avoiding Oil-mageddon…?

Behold a Pale Force (Majeure) in Libya which was swiftly undermined as the four bears of the low 70s arrived. ETF rolling, CTA and macro-driven selling were joined by OPEC+, hinting at delaying the gradual reintroduction of supply. This acted to undermine any demand narrative, not that the US or China had been doing much to prove the opposite. Highs of $77.50/bbl were fleeting, and Nov’24 Brent was pushed back to 73 with OPEC not really in the same position it was in ’73. The reintroduction of Libyan barrels is inevitable and likely largely priced in.

European Window: Brent Sells-off After Weekly EIA Report

Nov’24 Brent futures flat price shot up this afternoon from $73.25/bbl at 12:00 BST to a high of $74.14/bbl around 15:45BST, followed by a sharp descent down to $72.53/bbl at 17:15 BST, before rebounding back to $73/bbl around 17:30 BST(time of writing). The sell-off in oil price comes after the US Energy Information Administration (EIA) published their weeklyreport, stating a commercial crude inventory decline of 6.9 mb for the week to August 30, which was lower than APIestimates of 7.4 mb. In other news, China’s oil demand is growing at the slowest pace in the last 15 years with a decline of-2% YTD (excluding the COVID downturn), analysts at Bernstein said today. The drop in demand refl ects a wider slowdownin the Chinese economy with a lagging industrial sector, reduced property investment and consumer spending. Lastly, theKashagan oil fi eld in Kazakhstan is scheduled to be shut down for 4 weeks in October this year for maintenance. Inresponse, Kazakhstan’s energy ministry has sent a request to shareholders in the Kashagan oilfi eld to delay maintenance,citing gas shortages. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreadsare at $0.40/bbl and $1.35/bbl, respectively.

Overnight & Singapore Window: Brent Futures Rises to $73.20/bbl

Nov’24 Brent futures flat price spiked this morning from $72.90/bbl at 07:00 BST to the $73.20/bbl handle at 11:45 BST (time of writing). In the news today, Mark Lashier, CEO of Phillips 66, told Bloomberg that a refining capacity shortage is looming globally and could take effect as soon as next year, estimating a cut of 700,000 bpd from the market. The chief executive’s comments come after reports last month that US refiners were planning production cutbacks due to low margins. In other news, South Sudan and China National Petroleum Corp. are considering establishing a crude pipeline to boost oil exports, which is set to traverse Ethiopia and Djibouti. South Sudan’s President Salva Kiir has met with the CNPC chairman in China to discuss setting up refinery and distribution networks. Finally, weak US job openings data (JOLTS) released on Wednesday is continuing to fuel economic worries and risk aversion, with private sector jobs now lower than in early 2019. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.42/bbl and $1.47/bbl, respectively.

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