News Archive

The Officials: Will the bouncing cat land on his feet?

Nov Brent futures premium over Dubai partials has inverted in recent sessions, with Dubai, “oddly outperforming” according to one trader. Today Brent reclaimed some ground. Weak macros have failed to shake prompt strength out of Brent; front spread rose to 53c of backwardation. Consensus from APPEC was overwhelmingly negative, OPEC let a little air out of their ballooned demand forecast, and today the IEA revised down their demand forecast for 2024, it’s not a pretty picture. With very few trading months left for 2024 oil, where is the strength coming from?

Overnight & Singapore Window: Brent Rallies to $71.80/bbl Levels

The November Brent Futures contract has seen stronger price action this morning, reaching a peak around $71.86/bbl at 08:30 BST before retracing slightly and again rallying up to trade at $71.83/bbl at the time of writing (11:20 BST), as major producers extend production cuts and evacuations in the Gulf of Mexico. In recent developments, the US Bureau of Safety and Environmental Enforcement (BSEE) reported that 46% of the Gulf of Mexico’s 371 manned platforms and 60% of personnel from five rigs have been evacuated, with four rigs moved off location due to Hurricane Francine. The loss of production amounts to approximately 675kb/d, and contributed to prices rising this morning, especially with Libyan production remaining largely offline but nonetheless despite bearish EIA data emerging yesterday. In other news, Saudi Aramco has signed additional agreements with China’s Rongsheng Petrochemical and Hengli Group, advancing talks on refining and petrochemical sector cooperation. Aramco signed a Development Framework Agreement with Rongsheng, exploring the joint development of Saudi Aramco Jubail Refinery Company (SASREF) and potential cross-investments. Rongsheng may acquire a 50% stake in SASREF, while Aramco could acquire 50% in Rongsheng’s Ningbo Zhongjin Petrochemical Co. Ltd. At the time of writing, the Nov/Dec and Nov/May’25 Brent spreads are at $0.55/bbl and $1.41/bbl, respectively.

CFTC Predictor: Bulls Ejected From Oil

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.

The Officials: Gas struggles along the bumpy flat price road

The signals for emerging surplus are coming in. Everywhere you look the curve has flattened. From Dubai to the North Sea, benchmark grades are struggling to muster even the slightest backwardation. The flattening has been particularly acute in Brent. Yesterday time spreads down the curve dipped their toes into a bearish contango. At 76c, Dec/Dec spreads closed the weakest in over 3 years. Compared to three months ago structures are starkly different.

European Window: Brent Breaks Below $70 Again Before Recovering To $70.90/bbl

Nov’24 Brent Futures flat price initially declined this afternoon from $70.60/bbl at 12:00 BST down to a low of $69.06/bbl at 15:50 BST, testing the key psychological support level of $70/bbl again before rebounding up and touching $70.90/bbl at 17:40 BST (time of writing). The drop below $70/bbl likely triggered a sell-off as traders moved to minimize exposure to further downside risk. However, the swift recovery above $70/bbl may suggest strong buying interest at this critical level, with potential upside momentum. In the news today, EIA data for the week ending 06 Sep showed US crude inventories rose by 0.833 mb, below market expectations of a 1 mb rise, whilst US crude oil imports increased to 1.526 mb, compared to a 0.85mb draw over the previous week. According to Bloomberg, the increasing stockpile of US inventories has added to concerns about an oversupply of crude. In other news, Libya’s oil exports have plummeted to 194 kb/d, which is an 81% w/w decrease in exports, as per data by Reuters. The situation remains uncertain as the political standoff over control of the central bank continues between Libya’s rival governments. Finally, the National Hurricane Center has stated that Hurricane Francine is due to hit Louisiana this afternoon, with operations now suspended at Port Fourchon, a key energy services hub and supplier of equipment to offshore oil producers in the Gulf of Mexico. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.45/bbl and $1.12/bbl, respectively.

LPG Report: Sleepy Bears and CP Bulls

International propane continued to see bullish interest this fortnight, although this strength was more reflected in spreads than in flat price, with the latter drifting lower in line with the weakness in crude. This strength in spreads was most pronounced in Saudi (CP) propane, with the Q4/Q1’25 CP propane spread climbing from $10.50/mt on 30 Aug to just shy of $20/mt on 10 Sep before easing off to $17.15/mt on 11 Sep (at the time of writing).

The Officials: From East to West, latitude across the curve

Overnight & Singapore Window: Brent Rises to $70.60/bbl

The November Brent Futures contract has seen a stronger morning, steadily climbing to $70.84/bbl at the time of writing (11:20 BST) following the sharp sell-off yesterday, amid expectations that Hurricane Francine may disrupt oil and gas production in the Gulf of Mexico. We noted that Brent fell yesterday amid no visible changes in fundamentals as risk aversion gripped markets; this was evidenced in gold moving higher and bond yields declining markedly. In headlines, Exxon is planning to cut production at its 523 kb/d Baton Rouge refinery to 20% ahead of Francine’s expected landfall, as reported by Reuters.

The Officials: Sub 70 Brent sends Kennie into freefall

Traders were hoping for a quiet day going into the weekend but instead they got a comatose or nearly dead oil
market. At 15:00 BST Nov Brent stood at a consolidated $73.40/bbl, slightly above its level at yesterday’s close.
Then, however, markets went into freefall. Within the hour, Brent had toppled down by almost $2/bbl, to around
$71.50/bbl. Disastrous Canadian PMIs? Americans selling off? Or just the dour macros weighing down
everyone’s souls? And then in come the Saudis, slashing their monthly OSPs across the board for October
against the preceding month’s differentials. All grades into the Med and Northwest Europe received 80c cuts. In Asia, Arab Light and Medium took a 70c and 80c hits respectively, while Heavy was slapped with a full $1 cut.

European Window: Brent Falls Below $70/bbl For First Time Since December 2021

Nov’24 Brent futures flat price has plunged below $70/bbl this afternoon for the first time since December 2021, pricing at $71.20/bbl at 12:00 BST and reaching a high of $71.81/bbl at 14:30 BST, before diving down to $68.97/bbl at 17:30 BST (time of writing). The sell-off may have been exacerbated by a large number of longs stopping out, especially as prices fell below the $70/bbl psychological level. This comes amid expectations of ample supplies and demand concerns amid weak economic data out of vital economies such as China. In August, Chinese imports increased by just 0.5%, missing expectations for a 2% boost, and down from 7.2% growth a month prior. In the news today, OPEC lowered their global oil demand forecast for 2024 again from 2.11 mb/d to 2.03 mb/d. Until last month, OPEC kept the forecast unchanged since it was first made in July 2023. OPEC also cut its 2025 global demand growth estimate to 1.74 mb/d from 1.78 mb/d. Prices slid on the weakening global demand prospects and expectations of oil oversupply. Meanwhile, the EIA’s forecast for Brent crude oil prices reaching $84.44/bbl in 2024 has been lowered to $82.80/bbl. Correspondingly, their forecast for 2025 has been reduced from $85.71/bbl down to $84.09/bbl. Finally, Tropical Storm Francine continues to barrel across the Gulf of Mexico and is on track to become a hurricane this week. Still, we have yet to see any robust indication of how this hurricane could impact US oil supplies. 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 $0.96/bbl, respectively.

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