Reports

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.

After trading around the $73/bbl level overnight, the November Brent futures flat price saw another collapse on Wednesday morning where price action fell to lows of $72.64/bbl at 09:00 BST. From 11:22 BST, prices spiked by $1 over two minutes from $73.46/bbl to $74.56/bbl as the market reacted to the headline of OPEC+ discussing potentially delaying their planned oil output hike in October. Since then, prices corrected lower to $74.11/bbl by 11:40 BST (time of writing).

The November Brent Futures contract has seen a weak morning, trading down from daily highs of around $77.53/bbl at 08:00 BST to $75.73/bbl at the time of writing (11:20 BST). In headlines, two tankers, the Panama-flagged Blue Lagoon I and the Saudi-flagged Amjad, were struck by attacks in the Red Sea, with the Houthis claiming responsibility only for the former, according to Reuters. Both tankers, which sustained no significant damage, were able to continue their routes, the Amjad has a capacity of up to 2 mb of crude, while the Blue Lagoon I can carry 1 mb. The US Central Command criticized the Houthis’ actions as destabilizing regional commerce and endangering maritime safety. This attack reflects a broader trend of the Houthis targeting vessels in the Bab al-Mandab strait since last November, initially focusing on Israeli and allied ships but expanding their targets. Meanwhile, Russia has reportedly complied with its OPEC+ oil production cut obligations as of August, Deputy Prime Minister Alexander Novak told Interfax, as the country aims to make up for overproduction in 1H’24 of around 500kbpd by the end of the year. Russia exceeded its OPEC+ quota by 67 kb/d in July, with the government attributing the excess output “to one-off problems with the supply schedule, while the levels in August and September should make amends for this.” At the time of writing, the Nov/Dec and Nov/May’25 Brent Futures spreads are at $0.62/bbl and $2.05/bbl, respectively.