Reports

Nov’24 Brent Futures flat price climbed this afternoon from $71.76/bbl at 12:00 BST to $72.50/bbl at 17:25 BST (time of writing). The increase in crude prices comes as players wait and watch for further directional cues ahead of the Fed meeting on 18 Sep. The market is still hindered by bearish sentiment, however, amid demand worries in China and offline capacity in the Gulf of Mexico. In the news today, there has been much speculation as to whether the Fed will cut by 25 or 50 basis points. This will mark the first US interest rate cut since March 2020. Proponents of the view that the Fed will cut by 50 bps include Michael Feroli, analyst at JPMorgan, and Bill Dudley, the former New York Fed president and Bloomberg columnist. In contrast, Satyam Panday, chief US economist at S&P Global Ratings, foresees three cuts of 25 bps, one every Fed meeting for the rest of the year. Whichever way the Fed chooses to move on rates (25 or 50 bps), it is clear that the consensus is looking for a cut in the Sep/Nov and Dec meetings. In other news, in a note by Callum Bruce, Goldman Sachs has commented on oil price weakness, with Brent slipping below $70/bbl last week. Goldman Sachs claimed that Brent crude could recover to $77/bbl in Q4 ’24, on the condition that demand concerns abate, positioning and valuation recover, and OECD inventories remain somewhat below normal. However, their analysis also highlights the risk of comfortable inventory levels allowing the market to price in an expected 2025 supply surplus, potentially hampering recovery of crude prices. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.60/bbl and $1.51/bbl, respectively.

Nov’24 Brent Futures flat price saw a volatile afternoon but ultimately weakened, trading at $72.67/bbl at 12:00 BST and spiking to $73.21/bbl at around 15:25 BST, followed by a descent to $72.26/bbl at 17:30 (time of writing). The sell-off may be attributed to traders not wanting to keep long positions over the weekend, in addition to key Louisiana terminals reopening following now-tropical storm Francine. In news today, the port of New Orleans and the Louisiana Offshore Oil Port are back online, according to the US Coast Guard. Texas ports have also started accepting and servicing tankers, as per vessel monitoring data from LSEG. Meanwhile, Shell stated today that production is ramping up at five of their platforms in the Gulf of Mexico, however, the Perdido, Auger and Enchilada/Salsa platforms will remain shut due to other unspecified downstream issues. In other news, Macquarie revealed in a Friday note that its forecast for Brent crude has lowered by $2/bbl to $80/bbl for the rest of 2024, seeing potential for a heavy surplus of oil in 2025. The bank’s prediction follows both OPEC and the IEA lowering their global oil demand forecast this week. Finally, a Gazprom Neft-owned Moscow oil refinery has resumed operations, after a drone attack on 1 Sep halted production at refining unit Euro+, according to Reuters. The Euro+ unit accounts for half of the facility’s total production, with a refining capacity of 6 million metric tons of oil per year. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.59/bbl and $1.48/bbl, respectively.

Nov’24 Brent Futures flat price initially dipped this afternoon, decreasing from $71.72/bbl at 12:00 BST down to a low of $71.08/bbl at 14:55 BST, before sharply rallying up to the $72.28/bbl handle at 17:30 BST (time of writing). The increase in price may have been due to a combination of new speculative long positions alongside the liquidation of existing short positions and stronger sentiment in the physical market. In the news today, Saudi Arabia is set to boost crude oil exports to China in October by around 3 mb, as Chinese state refiners PetroChina and Sinopec have asked Saudi Arabia for more supply. This could be a sign of China’s propensity to stock up on commodities at lower prices, with Saudi Arabia having reduced the price of Arab Light to Asia by $0.70/bbl for October. In other news, Giovanni Staunovo, UBS analyst, stated in a note to clients that Hurricane Francine may have disrupted the supply of up to 1.5 mb of crude, amounting to 50,000 bpd. The category 2 hurricane has since weakened to a tropical storm, decreasing from wind speeds of 100mph down to sustained speeds of 35 mph. Finally, the Kremlin has begun a counteroffensive in the Kursk region as Russian soldiers attempt to push back Ukrainian forces, corroborated by President Zelenskyy. Meanwhile, Moscow’s troops have been steadily advancing through Eastern Ukraine, approaching the logistical hub of Pokrovsk. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.55/bbl and $1.41/bbl, respectively.

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.