TARGET: $70.00/bbl – $73.50/bbl PRICE: $71.65/bbl OPEC+: Much Ado About Nothing The front-month February 2025 Brent Friday morning was roughly where it started the week, with a brief rally in between. At the time of writing, Brent was trading at
The Feb’25 Brent futures contract fell slightly from $72/bbl at 07:00 GMT down to $71.65/bbl at 10:20 GMT (time of writing). Crude oil markets appear to have largely priced in the OPEC+ decision to delay production hikes, in line with traders’ expectations and ongoing concerns surrounding oil demand. In the news today, Russian Foreign Minister Sergei Lavrov stated in an interview that the use of a hypersonic missile on the Ukrainian city of Dnipro last month was a demonstration to the West that Moscow is ready to use any means to ensure no “strategic defeat” would be inflicted on Russia. In other news, Chevron will reduce capital expenditures in the Permian Basin to between $4.5 billion and $5 billion in 2025, a drop of more than 10% y/y and marking the oil giant’s first budget reduction since 2021, as per Bloomberg. Finally, German industrial production data released 06 Dec for October showed a 1% decline m/m compared to expectations of a 1.2% increase. The Federal Statistical Office of Germany said the decline was mainly centred in energy production and the automotive industry. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.38/bbl and $1.26/bbl, respectively.
This week, the North Sea physical market saw the largest amount of cargoes traded in 16 years, with 8 cargoes, or approximately 5.6mb of crude, changing hands in this Monday’s pricing window (2 Dec). With large market players Trafigura and Total going head to head for bids, we await to see if this spurt of buying will continue throughout December and lend further support to the Dated Brent market. In other news, 5 Dec’s OPEC+ ministerial meeting has been a key focus throughout the week with the cartel now delaying its production hike by three months, previously scheduled to begin in January with an increase of 180kb/d. Instead, the revival of its oil production will start in April and unwind output cuts at a slower rate than planned. Whether this move is enough to keep crude prices sustained above $70/bbl remains to be seen, with continuing Chinese oil demand concerns blighting the global demand growth forecast. In addition, the market appears to be unbothered by geopolitical tensions in the Middle East following the Israel-Hezbollah ceasefire, with both sides exchanging accusations of violating the peace deal. However, the Russia-Ukraine conflict poses more of a risk as Russia continues to directly target Ukrainian energy infrastructure, while Ukraine struck Russia’s Atlas oil depot in the Rostov region this week, showing the potential for supply disruption remains.
The Feb’25 Brent futures contract fell this afternoon from $72.85/bbl at 11:35 GMT down to $72.05/bbl shortly before 18:00 GMT (time of writing). In the news today, OPEC+ delayed the revival of its oil production by three months to April, originally scheduled to begin in January with a hike of 180kb/d, according to Bloomberg. OPEC+ is expected to unwind the output cuts at a much slower rate than previously planned, though no official timeline has been specified. In other news, rising costs have squeezed intermediaries out of Russian oil trade with India due to high funding costs in Russia and lack of access to Western funds, according to six trading sources cited by Reuters. Meanwhile, Russian oil flows to the Czech Republic via the Druzhba pipeline were seen resuming today after payment issues linked to the transit via Ukraine caused a halt, two sources told Reuters. Finally, Iraq’s oil exports fell slightly in November to 3.296mb/d from 3.327mb/d in October, according to a senior Oil Ministry official. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.42/bbl and $1.28/bbl, respectively.
The Feb’25 Brent futures contract has seen marginal strength this morning, trading from $72.40/bbl at 07:00 GMT up to $72.65/bbl at 10:25 GMT (time of writing). With the OPEC+ ministerial meeting on production policy taking place today on 05 Dec, traders are anticipating potential news of OPEC+ delaying production hikes further into Q1’25. In the news today, Shell and Equinor are to combine their UK offshore oil and gas assets in a 50-50 joint venture, Financial Times reported. The project, which will be based in Aberdeen, will take over Equinor’s stakes in three North Sea fields and Shell’s stakes in nine, adding to a combined production capacity of around 138kb/d. In other news, Unipetrol stated that Russian crude oil flows to the Czech Republic through the Druzhba pipeline remain halted, with a Unipetrol spokesman claiming he did not know the reason for the stoppage, as per Reuters. Finally, Rosneft has invested $20 billion in India recently, the Indian government quoted Russian President Putin as saying in a statement on Thursday, according to Reuters. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.41/bbl and $1.54/bbl, respectively.
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 Jan’25 US Mont Belvieu TET (Energy Transfer) propane contract (C3 LST) weakened from over 83c/gal on 25 Nov to 80c/gal on 04 Dec (at the time of writing). The Jan/Feb’25 LST fell from 1c/gal to 0.25c/gal in the same time and we now see trade houses flipping to selling the spread. Also in the US, **EIA stats** released on 04 Dec for the week ending 29 Nov showed that US propane production was at 2.8mb/d compared to 2.7mb/d for the week to 15 Nov. After the 4-week average for US propane exports reached an all-time high of 1.958mb/d in the week ending 15 Nov, propane exports softened to 1.881mb/d in the week ending 29 Nov. The Jan’25 LST/FEI arb has firmly breached the -$200/mt resistance level, reaching an intraday high of -$183/mt on 03 Dec. However, the differential stood at -$194/mt on 04 Dec (at the time of writing).
The Feb’25 Brent futures contract saw weakness this afternoon, increasing from around $73.80/bbl at 12:00 GMT to $74.07/bbl at 14:30 GMT, before declining to $73.25/bbl at 17:55 GMT (time of writing). EIA stats released at 15:30 GMT for the week ending 29 Nov showed a 5.07mb draw in US crude oil inventories. In the news today, Spain’s crude oil imports from Venezuela have hit the highest level this year since 2006, thanks to a US license for Spanish energy major Repsol to import Venezuelan crude. In other news, four sources briefed on US intelligence told Reuters that Hezbollah will likely try to rebuild its stockpiles and military forces to pose a long-term threat to the US and its regional allies, with Hezbollah reportedly smuggling materials through Syria. Finally, Pakistan’s Energy Minister Awais Leghari stated that the country requires additional oil refining capacity and is interested in attracting investment from Russia, following a meeting of the Russia-Pakistan intergovernmental commission, reported by Interfax. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.39/bbl and $1.46/bbl, respectively.
The Feb’25 Brent futures contract rose this morning from around $73.80/bbl at 07:00 GMT to $74.10/bbl at 10:20 GMT (time of writing). Crude oil prices remained supported this morning while traders await tomorrow’s OPEC+ meeting (5 Dec), where ministers are expected to further delay production hikes into Q1’25. In the news today, in light of the Syrian rebels’ attack on Aleppo on 30 Nov, Iranian Foreign Minister Abbas Araghchi stated “If the Syrian government wants us to deploy troops in Syria, we’ll consider their request”, as per Bloomberg. In other news, the Kremlin’s spokesman, Dmitry Peskov, told the Izvestia newspaper that “there are no grounds for negotiations yet” on how to bring the war in Ukraine to an end. Meanwhile, Reuters reported that advisers to US President Trump are floating proposals to cede Ukrainian territory to Russia while ruling out potential NATO membership for Ukraine. Finally, South Korean lawmakers submitted a bill on Wednesday to impeach President Yoon Suk Yeol after he declared martial law and reversed the move hours later, as per Reuters. S&P Global claimed that the political conflict would pose no risk to oil products supplies for Asia-Oceania customers. However, the Korean Confederation of Trade Unions (KCTU) launched an indefinite labour strike on 4 Dec until the South Korean president resigns, which could cause minor delays in the domestic retail fuel supply network. Finally, At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.44/bbl and $1.63/bbl, respectively.
In Europe, stop-out flow was joined by heavy selling, which saw the spreads, both deferred and prompt, alongside crack selling down the curve. The last week of November was also likely pressured by significant selling from a major as we approached pricing, which was supported by a wide array of sellers. The previous support from the Cal crack buying dissipated, and there was better selling in both 2025 and 2026. The MOPJ spreads weakened, too, but to a less significant extent with some backend physical buying.
The Feb’25 Brent futures contract continued to rise this afternoon from $72.62/bbl at 12:00 GMT up to $73.65/bbl at 17:50 GMT (time of writing). In the news today, Russia’s seaborne crude exports have risen ahead of 5 Dec’s OPEC+ ministerial meeting to discuss production policy for 2025. Daily crude flows in the week to 1 Dec jumped by about 570kb/d to 3.36 million with more ships leaving Russia’s Baltic, Black Sea, and Arctic ports, according to vessel-tracking data compiled by Bloomberg. In other news, Israel’s Defence Minister Israel Katz threatened to return to war in Lebanon if its truce with Hezbollah collapses, stating “until now we separated the state of Lebanon from Hezbollah… it will no longer be [like this]”, according to a Reuters report. Finally, maintenance at Kazakhstan’s Tengiz oil field is still ongoing with repairs not completed on schedule, the Kazakh Energy Ministry told Russian news agency Interfax. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.39/bbl and $1.46/bbl, respectively.
The Brent/Dubai continues to narrow, with the front-month contract falling below $0.50/bbl, the lowest level for a front-month contract since September. On paper, Dubai crude has gained much of the strength lost in previous months. The fundamental story suggests a bullish market reaction to the expectation of OPEC+ prolonging their output cuts into Q1. Previously, the Brent/Dubai forward curve had priced in the expectation of extra barrels, which has supported outright levels. The entire forward curve has shifted lower from $1/bbl to around $0.80/bbl. We have officially returned to the ‘standard’ regime of Brent/Dubai selling, and Dubai spread buying, as evidenced by our market positioning data.
December began with a buying spree in the Platts window, with Total and Trafigura buying a total of seven cargoes – the most recorded in the window for years.
November Review Edition: Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in LPG and Gasoline 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.
The Feb’25 Brent futures contract was supported this morning, rising from $72.10/bbl at 07:00 GMT to $72.50/bbl at 10:30 GMT (time of writing). Crude oil prices were elevated amid reports that OPEC+ is likely to extend oil production cuts at its 5 Dec meeting until the end of Q1’25, four OPEC+ sources told Reuters. In the news today, the Pentagon has announced a new $725 million arms package for Ukraine which includes anti-personnel mines and air defence missiles. Meanwhile, diplomats expect Ukraine’s invitation for NATO membership is unlikely to be approved at the NATO foreign ministers meeting, taking place 3-4 Dec in Brussels. In other news, Indonesia has launched auctions for six oil and gas exploration blocks, bringing the total number of blocks offered this year to 11, according to the country’s Energy and Mineral Resources Ministry. Dadan Kusdiana, a senior energy ministry official, stated that the six blocks have a combined potential of 48 billion barrels of oil equivalent. Finally, a sophisticated fuel oil smuggling network is believed to generate at least $1 billion per year for Iraq and its proxies since Prime Minister Mohammed Shia al-Sudani took office in 2022, five sources told Reuters. The operation exploits Iraqi government subsidies for fuel oil allocated to asphalt plants, diverting 3.4mb to 5mb of fuel oil each month for export, primarily to Asia. In addition, Iraq has halted operations at its Basra oil refinery on 1 Dec due to overloaded storage tanks, with the facility producing approximately 260kb/d of fuel oil prior to the shutdown, according to Zawya. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.30/bbl and $1.25/bbl, respectively.
