Brent crude futures have been trading higher at the start of November, with prices in the Jan’25 contract trading above $74/bbl as of Monday morning. Price action was supported as market participants remain on edge over the conflict in the
The Jan/Feb’25 Brent futures spread recovered from an intraday low of $0.30/bbl on 29 Oct to an intraday high of $0.46/bbl on 01 Nov, where it met resistance. This recovery emerged amid Iran threatening to retaliate against Israel’s attack, injecting further risk into the market.
After rallying at market open this week from $72.90/bbl on 01 Nov to $74.35/bbl last night, the Jan’25 Brent futures contract showed steady support this morning, climbing from $74.40/bbl at 07:00 GMT up to $74.70/bbl just after 10:40 GMT (time of writing). Crude oil prices were elevated amid an OPEC+ decision on Sunday to extend its output cut of 2.2mb/d by another month, initially planning to increase production in December. In the news today, according to a Reuters report, Israel has officially notified the UN that it is cancelling the agreement that regulated relations with the UN relief organization for Palestinian refugees (UNRWA) since 1967, fuelling concerns of a worsening humanitarian situation in Gaza. This came as Palestinian medics claimed Israeli airstrikes killed at least 31 people in the Gaza strip on Sunday. In other news, China’s refining output is set to fall to 14.7mb/d this quarter on thin margins and weak demand, in addition to maintaining lower run rates in Q1’25, as per Reuters. Finally, Eni has sold $1 billion worth of upstream offshore assets in Alaska to US private company Hilcorp, planning to raise €8 billion in net proceeds between 2024-2027 to fund the growth of its low-carbon units. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.41/bbl and $1.42/bbl, respectively.
The Jan’25 Brent futures contract weakened this afternoon, moving from the $74.30/bbl level at 12:00 GMT down to $73.30/bbl at 17:30 GMT (time of writing). Crude oil prices sold-off 80c just after 14:20 GMT, declining to $73.47/bbl at 14:50 GMT, amid the release of US manufacturing PMI data at 14:00 GMT showing a contraction to 46.5 in October, compared to a forecast of 47.6. In the news today, according to a Bloomberg report, oil supplies from OPEC increased by 370kb/d to 29.9mb/d in October, with Libya adding 500kb/d after the end of the central bank feud and Iraq cutting 90kb/d. In other news, Venezuela’s oil exports have reached a four-year high, approaching 950kb/d in October, as per Reuters. The boost in oil exports is the result of increased crude output and more sales to India and the US, according to ship tracking data. Finally, Exxon reported $8.61 billion in their Q3-24 earnings, down 5% y/y, while hitting a 40-year liquids production high at 3.2mb/d. Meanwhile, Exxon has sold the Fos-sur-Mer refinery in France to a consortium composed of Entara and Trafigura. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.38/bbl and $1.27/bbl, respectively.
In High Sulfur Fuel Oil (HSFO), the huge 3.5% rally may have stalled, with the front crack reaching a new high of -$7.10/bbl on 30 Oct. The strength seems to have softened since, with Dec’24 dropping to -$8.55/bbl on 1 Nov. Dec’24 380 E/W fell saw its strength wane, unable to hold rallies above $9.75/mt. Dec’24 E/W open interest dropped to 8.4mb on 15 Oct but rose to 9.5mb by 30 Oct, indicating profit-taking. Dec’24 Visco saw small gains, peaking at $12.50/mt on 1 Nov, with net buying amid low liquidity and minor day-to-day changes.
The Risk Premium Rises (Again) On Monday, we held a bearish view of the Jan’24 Brent futures contract and forecast it to end the week between $68-71/bbl. While the futures contract did weaken to an intraday low of $70.28/bbl on
The Jan’25 Brent futures contract strengthened this morning from $74.05/bbl at 07:00 GMT up to $74.65/bbl at 10:10 GMT, before coming off to around $74.30/bbl at 10:35 GMT (time of writing). Crude oil prices saw support amid reports that Iran is preparing a major retaliatory attack on Israel by proxy from Iraq in the coming days, with US officials continuing to work towards an Israel-Lebanon ceasefire deal in the meantime. In the news today, Israel hit Beirut’s southern suburbs with airstrikes aimed at Hezbollah assets early this morning, in the first such strikes in days targeting the dense urban area. In other news, according to S&P Global, Russia is not planning to lift its gasoline export ban early due to ongoing refinery turnarounds and high retail prices, after Russian officials indicated in September that the ban could be lifted early on the condition of a gasoline surplus. Turnarounds are expected to continue at several Russian refineries into the first half of November, including the Norsi, Ryazan, and Volgograd facilities. Finally, a Ukrainian drone has crashed into an oil depot in Russia’s Stavropol region, reported by a local governor Vladimir Vladimirov on Telegram. This follows yesterday’s drone attack on the Russian region of Bashkortostan, where major oil company Bashneft operates several large refineries. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.41/bbl and $1.33/bbl, respectively.
After rallying this morning, the Jan’25 Brent futures contract saw continued strength this afternoon, moving from $72.65/bbl at 12:00 GMT up to $73.23/bbl at 15:25 GMT, however, price tapered off to $72.75/bbl by 18:05 GMT (time of writing). Crude oil prices were supported with ongoing uncertainty regarding a potential Israel-Lebanon ceasefire deal. In the news today, the IMF has cut their Middle East GDP growth outlook to 2.1% for this year, slashed by 0.6% from their April forecast. According to the IMF, this comes amid continuing regional conflict and expectations of a delay in OPEC+ oil production cuts. In other news, TotalEnergies missed the analyst estimate of $4.27 billion profit for Q3’24, reporting an adjusted net income of $4.1 billion on weaker refining margins and lower LNG production. Finally, Rosneft’s Tuapse oil refinery, one of Russia’s biggest Black Sea refineries, is due to resume operations in November. The facility was suspended from 1 Oct because of low margins on refined fuels, however, is expected to process about 480,000 metric tons of crude oil next month, as per Reuters. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.37/bbl and $1.16/bbl, respectively.
Brent gapped down on the open on Monday as a chunk of geopolitical risk was removed following a bearish market reaction to Israel’s attack on Iranian military bases. US-backed ceasefires continue to bring some hope, and geopolitical tensions are semi-resigned to the backburner of public attention. Betting sites show Trump’s next presidency at a 65% sure thing, although national polls are pretty tight. With a week until the big day, the US has been focused on establishing who is and is not ‘garbage’. The moral highpoint surrounding Trump’s comedian’s Puerto Rico gaffe dropped like SMCI stocks as Biden had his very own garbage gaffe. Macro releases from the States are pretty murky and seem a step away from the clean, soft landing that was discussed. More polls indicate an even split from ‘analysts’ as to whether OPEC will return the promised/threatened December barrels. The return being in question, let alone out loud, seems far from a good thing.
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 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.
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.
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.
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.
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…
