LPG Report: Time to start “drawing”?
Propane flat price contracts took a significantly bearish turn at the start of the fortnight ending 22 Oct as the geopolitical risk premia from the regional escalation of tensions in the Middle East waned….
News
Overnight & Singapore Window: Brent Futures Falls To $75.10/bbl
The Dec’24 Brent futures contract saw weakness this morning, trading at $75.93/bbl at 07:00 BST and falling to $75.10/bbl at 11:10 BST (time of writing). After the release of API figures yesterday evening, showing US crude oil stocks rose far above market expectations of 0.3mb up to 1.64mb, price has declined further amid anticipation of EIA data releasing at 15:30 BST today, with the market expecting a 700kb build in US crude inventories. In the news today, Israeli strikes across Gaza have killed 20 people, with Israel stepping up their operation following the death of Hamas leader Yahya Sinwar last week. Meanwhile, US Secretary of State Antony Blinken urged Israel today to use this opportunity to end the war in Gaza, stating Israel should be looking to bring home remaining Gaza hostages and agree to a ceasefire. In other news, India’s Finance Ministry are considering a proposal to scrap the windfall tax on domestic crude oil production due to falling international crude prices, as per Reuters. Finally, Saudi Arabia’s economy is projected to grow by 4.4% in 2025 partly due to OPEC+ unwinding production cuts in December, a Reuters poll of economists showed. This would be Saudi Arabia’s highest rate of growth in three years, with only 1.3% growth expected for 2024. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.37/bbl and $1.69/bbl, respectively.
Naphtha Report: Look to the East
The naphtha market witnessed a bearish shift in sentiment over the past fortnight, driven by dissipating geopolitical risk premia and deteriorating demand narratives ahead of the Northern Hemisphere winter.
Dubai Market Report – Tentative Tensions
The Brent/Dubai market saw another tumultuous fortnight that ultimately resulted in an upwards shift in the prompt tenors. Cal25 has been comfortably supported at the $1/bbl level. However, the main story has been in the front, where the Nov’24 Brent/Dubai initially threatened to break below $1/bbl on multiple instances before rallying above $1.20/bbl on weakness in Nov’24 Dubai. As Nov/Dec Dubai witnessed aggressive selling…
Dated Brent Supplementary Report – Flatlining…?
Over the past week, the Dated Brent market has been unmistakably rangebound. The front Brent spread mean reverted around 40c, and the geopolitical risk premium normalised in the flat price in lieu of genuine, bullish movements from either side as third parties try eagerly to resolve and or protect energy security ahead of the US election in particular. The prompt DFL fell to -10c/bbl on 15 Oct as spreads and the flat price came off on the news that the Washington Post reported Israel would not strike Iranian Energy, alongside British majors and Geneva trade houses offering Ekofisk, moving the physical diff to around 16c. The physical diff weakened following this, but the DFL recovered to 18c/bbl on 22 Oct in thin trading.
European Window: Brent Climbs To $76.20/bbl
The Dec’24 Brent futures contract saw sustained strength this afternoon, trading at $74.82/bbl at 12:00 BST and reaching $76.20/bbl at 17:45 BST (time of writing). Price action was on the rise this afternoon as the Chinese Ministry of Commerce lifted its crude oil import quota for 2025 by 6% to 5.14mb/d, as per Reuters. In the news today, the IMF has lifted their 2024 growth forecast for the US by 0.2% to 2.8% but has cut the forecast for China by 0.2% to 4.8%, citing continued weakness in the property sector and low consumer confidence. The IMF’s 2025 China growth forecast was unchanged at 4.5%. In other news, Chinese demand for natural gas is set to jump by more than 50% by 2040 and reach 100m tons in LNG imports very soon, according to an executive at Cheniere Energy, Yingying Zhou, in a statement at the Asia Gas Markets conference. Finally, a Bloomberg report revealed that the US is monitoring shadow fleets in Southeast Asia, posing safety and environmental hazards. Malaysian coasts currently harbour the largest cluster of shadow fleet tankers, where ship-to-ship (STS) transfers are made to hide the origin of the oil. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.50/bbl and $1.77/bbl, respectively.
Onyx Alpha: The Beast in the East
Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in distillates, naphtha and LPG 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 Strengthens To $74.95/bbl
The Dec’24 Brent futures contract found strength this morning, moving from $73.85/bbl at 07:00 BST up to $74.95/bbl at 11:20 BST (time of writing). Prices have been supported this morning as tensions heighten in the Middle East, with airlines including Emirates and Qatar Airways now suspending flights to Iran. In the news today, US Secretary of State Antony Blinken has arrived in Israel to meet Israeli Prime Minister Netanyahu and revive ceasefire talks. Just a few hours before Blinken’s arrival, Hezbollah has fired several missiles into Tel Aviv and Haifa, according to Financial Times. In other news, Russia’s seaborne crude shipments have risen to their highest level since June this year. Russia shipped 3.47mb/d of crude in the four weeks to 20 Oct, a 140kb/d jump in four-week average cargoes, as per data by Bloomberg. Finally, the Chinese Ministry of Commerce has increased China’s 2025 crude oil import quota for non-state-owned firms at 5.14mb/d. The ministry will add and adjust quotas based on companies’ demand and new capacity. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.38/bbl and $1.63/bbl, respectively.
European Window: Brent Trades Down To $74.15/bbl
The Dec’24 Brent futures contract found strength this morning, trading at $73.29/bbl at 07:00 BST and increasing to $74.10/bbl at 11:00 BST (time of writing). Price action saw upward movement this morning amid a new wave of Israeli airstrikes on Hezbollah-affiliated financial institutions, heightening concerns that Israel is expanding its offensive beyond military infrastructure. Meanwhile, satellite imagery has shown that Iran has partially filled its Jask oil terminal with crude oil, as the country seeks to reduce its reliance on the Strait of Hormuz for oil exports. In the news today, according to the General Administration of Customs (GACC), China reduced its crude imports from major suppliers in the month of September. GACC data showed China’s daily crude imports from Russia, Iraq, and Brazil fell m/m by 4.52%, 16.00%, and 48.85%, respectively. However, crude imports from Saudi Arabia increased to 1.81mb/d, up 44.92% m/m since August. In other news, South Sudan’s crude oil exports are set to resume as a blockage in a northern pipeline via Sudan has been cleared. As per Bloomberg, the pipeline funnelled more than 150kb/d to Port Sudan prior to its breakdown in February this year. Finally, the Indian oil minister Hardeep Singh Puri stated that India’s petrochemical sector is projected to receive investments worth $87 billion over the next decade to meet rising demand. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.36/bbl and $1.43/bbl, respectively.
CFTC Weekly: Bulls On A Tightrope
In the week ending 15 Oct, Brent and WTI futures saw increasingly choppy price movements, although both contracts concluded the week softer than where they started. Combined Brent and WTI managed-by-money positioning showed a 41.6mb (-9.8%) decline in long positioning w/w alongside the removal of 1.2mb (-0.8%) of short positions. In addition, producers/merchants liquidated 9.4mb (-0.70%) and 36.8mb (-2.30%) from their Brent and WTI longs and shorts, respectively.