News

European Window: Brent Rises To $72.35/bbl

The Jan’25 Brent futures contract strengthened this afternoon, increasing from $71.90/bbl at 12:00 GMT up to $72.35/bbl at 17:45 GMT (time of writing). Price spiked 75c up to $72.65/bbl shortly before 12:30 GMT amid an OPEC+ announcement that the oil production hike planned for December could be delayed by more than a month, as per Reuters. In addition, EIA stats released at 15:30 GMT for the week to 25 Oct showed a draw of 0.5mb in US crude oil inventories, which supported prices further. In the news today, US mediators are working on a 60-day ceasefire between Israel and Hezbollah, as per Reuters. Meanwhile, Israel has continued its attack on Lebanon, targeting the city of Baalbek today. In other news, according to a Bloomberg report, oil production in Guyana dropped 11% in Q3’24 while Exxon temporarily shut two of its three vessels for maintenance. Hess Corp., which has a 30% stake in the Stabroek Block, stated that its share of production declined to 170kb/d from 192kb/d in Q2’24. Finally, Russia’s Gazprom has boosted its 2024 investment plan by 4% to $16.9 billion thanks to rising exports and domestic supply. The company continues to develop projects aimed at increasing gas supply to China, according to Gazprom’s Deputy Chairman of the Management Committee, Famil Sadygov. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.37/bbl and $1.07/bbl, respectively.

Overnight & Singapore Window: Brent Strengthens To $71.80/bbl

The Jan’25 Brent futures contract strengthened marginally this morning, moving from $71.70/bbl at 07:00 GMT to touch $71.80/bbl at 10:30 GMT (time of writing). Price action was volatile this morning alongside fluctuating geopolitical risk premia, spiking to almost $72.10/bbl around 08:30 GMT before descending below $71.50/bbl at 10:00 GMT. We also saw downward pressure amid resuming Israel-Lebanon peace talks, with an Axios report stating that US President Biden’s senior advisors are travelling to Israel tomorrow in an attempt to close the ceasefire deal. In the news today, crude oil production at Mexican state-owned giant Pemex was at nearly 1.75mb/d in September, down 1.2% y/y, according to a note by Giovanni Staunovo. In other news, PetroVietnam said today that Saudi Aramco is looking to invest in oil refining, petrochemicals, and oil product distribution in Vietnam, as per S&P Global. Aramco CEO Amin Nasser stated the oil giant will send a working group to Vietnam soon to advance discussions on multiple projects, however, specific details are yet to be disclosed. Finally, CNOOC has signed an oil contract with Iraq’s state-run Midland Oil Company to develop the Block 7 field, located in the Diwaniyah province. While CNOOC anticipates a large discovery of crude oil, appraisals are needed to accurately understand Block 7’s reserve potential, as per Reuters. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.35/bbl and $0.86/bbl, respectively.

Dated Brent Report – Strength in Chaos

The Brent futures market was taut in anticipation and volatility last week as the leak of intelligence about the, at the time, looming Israeli strike on Iran meant that the waiting game would have to continue, and there were fewer clues. The front spreads have been rangebound over the fortnight, and the DFL market has superseded this, allowing for the Dated-to-Lead (DFL vs Brent spreads) structure to swing up. The question for spreads is whether they see the support from the Dated structure ripple through the DTL reverting, or whether the anticipated heavy pressure in the futures structure will strike through the structural integrity of the curve. The physical differential dropped to around 5c on 17 Oct and has gently been implied higher since.

European Window: Brent Falls To $70.60/bbl Level

Jan’25 Brent futures flat price weakened this afternoon, falling from around $71.90/bbl at 12:00 GMT and finding a floor around $70.30/bbl at 15:30 GMT before rising to $70.68/bbl at 17:30 GMT (time of writing). Crude oil prices faced downward pressure amid persistent concerns over weak Chinese demand, as well as reports of a scheduled meeting between Israeli Prime Minister Netanyahu and his ministers to discuss potential resolutions to the conflict in Lebanon, according to Axios. In the news today, an OilChem survey indicated that China plans to reduce fuel exports by 14.2% in November. Total fuel exports are projected at 2.54 million tons, with allocations for gasoil and kerosene down by 28% and 18% compared to October, respectively. In other news, Angola’s Cabinda oil refinery is set to be commissioned between January and February, the CEO of Gemcorp has stated. Meanwhile, the first supplies of fuels are projected to reach local markets between March and April. The greenfield project will refine 30kb/d of Angolan Cabinda crude and supply 5-10% of the country’s needs, according to Reuters. Finally, Phillips 66 plans to operate its refineries between the low to mid 90% range capacity in Q4’24, making for a combined capacity of 1.5mb/d, as per Reuters. At the time of writing, the front-month (Jan/Feb’25) and six-month (Jan/Jul’25) Brent futures spreads are at $0.33/bbl and $0.83/bbl, respectively.

Gasoline Report: Mo(re)-gas

It was two weeks of retracement for the gasoline complex, with the supply situation improving in the Atlantic Basin. Previously, bullish factors, including supply tightness in the Mediterranean, demand-pull from West Africa (WAF), and US demand, had supported the market. This is now reversing, given the increasing crude output from Libya and some refineries returning from maintenance early. In fact, the US autumn maintenance is expected to be the lowest since 2021, according to…

Onyx Alpha: Inflection Point

Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in gasoline and high sulphur fuel oil 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.

Overnight & Singapore Window: Brent Futures Strengthens To $71.75/bbl

The Jan’25 Brent futures contract strengthened from $70.90/bbl at 07:00 BST to $71.75/bbl at 10:35 BST (time of writing). Prices saw support this morning amid reports of Chinese power demand growing faster than expected in 2024. In the news today, according to the China Electricity Council’s Q3’24 report, the country now sees 2024 electricity consumption growing by 7% to 9.9 trillion kWh. In its previous report, the group had forecast 6.5% growth to 9.82 trillion kWh. In other news, Israel is maintaining the intensity of its attacks on Gaza, with a Reuters report stating at least 60 Palestinians were killed and dozens wounded in an Israeli strike on a residential building in the northern Gaza town of Beit Lahiya today. Finally, Reuters reports that Mexico has sent a crude oil cargo of 400kb to Cuba, which is expected to arrive by the end of the week. Cuba is currently experiencing a series of blackouts alongside food and fuel shortages. At the time of writing, the front-month (Jan/Feb’25) and six-month (Jan/Jul’25) Brent futures spreads are at $0.37/bbl and $1.04/bbl, respectively.

European Window: Brent Weakens To $71.35/bbl

The Jan’25 Brent futures saw an interesting trend this afternoon as price action initially rose from the $71/bbl level at 13:00 GMT, creating a triple top pattern near $71.90/bbl before falling lower to $71.35/bbl by 17:30 GMT (time of writing). Alongside reports of PetroChina’s plan to shut its largest refinery in 2025, the Jan’25 contract tested the $71.90/bbl level on multiple occasions throughout the afternoon. However, crude oil prices ultimately failed to sustainably stay above this level, amid a removal of some of the geopolitical risk premium previously supporting oil prices. In the news today, state-owned PetroChina is projected to shut its Dalian Petrochemical plant in 2025, which accounts for 410kb/d, or 3%, of the total Chinese refinery output, according to Reuters. In other news, Chinese oil and gas exploration company CNOOC reported a net profit of $5.2 billion for Q3’24, up by 9% y/y from 2023. In the first nine months of 2024, CNOOC made 9 new discoveries and appraised 23 oil and gas-bearing structures. In other news, IndianOil, the biggest refiner in India, has released its Q2’24 results, showing that the company’s net profit fell by 98.6% y/y, partly influenced by low fuel demand in the monsoon season. At the time of writing, the front-month (Jan/Feb’25) and six-month (Jan/Jul’25) Brent futures spreads are at $0.34/bbl and $0.92/bbl, respectively.

Brent Forecast: 28th October 2024

The Market Resets Oil prices finally saw a cooling of the geopolitical risk premia tied to fears of an Israeli attack on Iranian oil and nuclear infrastructure, with the soon-to-be-prompt Jan’25 Brent futures contract falling from a close of $75.62/bbl

Futures Report: The Geopolitical Waiting Game

In the early hours of Saturday, Israel launched a series of targeted airstrikes on Iranian military targets, killing 4. This move has temporarily eased the oil market’s anxieties, which have been high on Middle Eastern tensions and the geopolitical risk premium associated. Iran’s response to the strikes has been perceived as quite measured. Ayatollah Khamenei urged caution, emphasising that any response would be a military decision. Israel, on the other hand, seems satisfied with the operation, with Prime Minister Netanyahu describing it as precise and successful. The Biden administration appears keen to cool tensions ahead of the upcoming US election, which has Trump projected to win in many polls and betting sites.

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