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 saw sustained strength this morning, increasing from $73.25/bbl at 07:00 GMT up to $73.95/bbl at 10:55 GMT (time of writing). Geopolitical risk was elevated as Russia fired an intercontinental ballistic missile at the southern city of Dnipro, Ukraine for the first time since the start of the conflict in 2022, according to Financial Times. In the news today, US President-elect Donald Trump intends to revive the construction of the Keystone XL pipeline on his first day in office. The 1,200-mile-long pipeline was supposed to carry some 800kb/d of Canadian heavy crude to US refineries. In other news, Exxon has decided to pull out of an exploration block offshore Suriname and transfer its 50% stake to Petronas, as stated by Suriname state-owned company Staatsolie. Finally, Exxon, Hess, and CNOOC plan to add a fourth production vessel in the Stabroek Block offshore Guyana, according to Hess Corp.’s CEO quoted by Reuters. The new facility is expected to add 250kb/d to the group’s output capacity by 2026. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.35/bbl and $1.29/bbl, respectively.
The Jan’25 Brent futures contract declined this afternoon after initial strength, moving from $73.60/bbl at 12:00 GMT up to $73.93/bbl at 14:00 GMT, before falling to $72.90/bbl at 17:40 GMT (time of writing). Crude oil prices fell to the $73/bbl support level just after 15:30 GMT today amid the release of EIA data, which showed a build of 545kb in US crude oil inventories for the week to 15 Nov. In the news today, Ukraine has fired UK-made Storm Shadow missiles at targets inside Russia, a day after using the US ATACMS, as per Reuters. In other news, Nigeria’s Dangote refinery has purchased its first shipment of US oil after a hiatus of three months, according to a Bloomberg report. The plant purchased about 2mb of WTI Midland from Chevron, due to be delivered next month to the refinery near Lagos. Finally, the Iraq’s Ministry of Foreign Affairs has asked Iranian authorities to stop trucks carrying “oil, black oil and other petroleum products” through the border crossing areas in Iraq’s semi-autonomous Kurdistan region unless exports are licensed by SOMO, according to a 12 November letter seen by Argus. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.31/bbl and $1.11/bbl, respectively.
Middle Eastern propane (C3 CP) drove bullish sentiment in the propane market as CP attracted sticky buying despite lower crude. This was aided by a strong CP settlement and improved demand from India during its festival season. As a result, the front Dec/Jan spread rose to $10/mt over the fortnight. In line with this, the FEI/CP was heavily pressured as the Dec’24 FEI/CP spread fell from $10/mt to lows of -$12/mt, with rising freight rates a contributing factor.
The Jan’25 Brent futures contract rose this morning from $73.30/bbl at 07:00 GMT up to a high of $73.92/bbl at 09:20 GMT, before falling back down to $73.50/bbl at 10:40 GMT (time of writing). This morning, a Reuters report citing Kpler vessel-tracking data showed that China’s crude imports are on track to end November at or close to record highs, however, no exact figure was specified. Meanwhile, markets forecast a 0.8mb in US crude oil inventories, with EIA data due to be released at 15:30 GMT today for the week to 15 Nov. In the news today, around 10,900 North Korean troops have been deployed to the Kursk region as part of Russia’s airborne unit and marines, in addition to shipping arms for the war in Ukraine, according to a South Korean lawmaker Lee Seong-kweun citing the National Intelligence Service. In other news, the acting Minister of Natural Resources in the Kurdistan Regional Government (KRG), Kamal Mohammad Salih, stated that Kurdistan’s oil exports will resume at the beginning of 2025 with barrel extraction costs set at $16, as per an article by Kurdistan24. This followed an agreement between the KRG and the central Iraqi government on a new production-sharing framework. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.32/bbl and $1.05/bbl, respectively.
Over the past week, the Dated Brent market has been undoubtedly bullish as physical differentials rose from 34c on 11 Nov to 110c on 18 Nov. There has been strong bidding in the physical windows with Petroineos a big bidder last week; Total was also big on the buy side. Today, I bought three grades; Trafi has been bidding here and there. On the sell-side, BP has been offering, and Unipec is also selling. There has been bidding for Midland and Forties at the front of the curve which has supported the diff. Midland has been offered further down the curve, now setting the curve. There was some Forties bidding at the back earlier in the week, but this was not maintained.
The Jan’25 Brent futures contract strengthened this afternoon from $72.95/bbl at 12:00 GMT up to $73.35/bbl at 17:45 GMT (time of writing). Crude prices were volatile this afternoon, rising to $73.85/bbl at 15:25 GMT and steeply selling off to $72.85/bbl by 15:30 GMT, amid news that Iran agreed to stop producing near bomb-grade uranium, according to Bloomberg. Prices recovered amid ongoing concerns regarding North Sea production outages and escalation of the Russia-Ukraine conflict. In the news today, Russian crude oil shipments dipped to a two-month low in the four weeks to 17 November, as loading from Russia’s Western ports decreased, as per tanker-tracking data compiled by Bloomberg. In other news, Nigeria’s Dangote refinery is looking to buy WTI Midland for December arrival with a cargo size of 1-2mb, to be delivered to the Lekki plant near Lagos. In addition, data by Vortexa and Kpler revealed that a tanker has hauled more than 300kb of gasoline from the Dangote plant to waters of Togo, a potential sign that more volume could enter regional markets. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.25/bbl and $1.00/bbl, respectively.
The naphtha market has struggled over the past two weeks, with poor performance observed across both European and Asian complexes. We saw flows primarily skewed towards the sell-side, with trade houses and refiners being key sellers in the NWE crack and the E/W naphtha differential. However, a surge in trade house buying activity in the front-month NWE spread has emerged, despite recent weakness. It remains to be seen if this buying will persist and whether it can provide much-needed support for prompt NWE naphtha in the coming weeks. Adding to this dynamic, the second half of 2024 brings anticipated cracker closures in Europe and startups in China, suggesting weaker demand in the West as demand potentially strengthens in the East.
November continues to be a lacklustre month in the Brent/Dubai complex as market participants gradually retreat and become more risk-off leading up to Christmas. Glance no further at open interest levels where market risk is focused in the front tenors (Nov’24, Dec’24, Jan’25), which have plateaued and declined recently. In contrast, open interest in the deferred contracts is roughly in line with their 5-year average. Reaction to fundamental news has been lacking, which has instead been focused on Brent. Perhaps some normality is much needed after a whirlwind couple of years.
Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in 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 Jan’25 Brent futures contract saw weakness this morning, decreasing from $73.35/bbl at 07:00 GMT to $72.70/bbl at 09:30 GMT, before recovering slightly to $73.10/bbl at 11:00 GMT (time of writing). Crude oil prices dipped this morning as Lebanon and Hezbollah have agreed to a US ceasefire proposal, requiring Hezbollah to have no armed presence in the area between the Lebanese-Israeli border and the Litani River. Furthermore, production at Norway’s Johan Sverdrup is back online after an onshore power outage, with Johan Sverdrup reportedly operating at two-thirds of its 755kb/d capacity, as per Reuters. In the news today, Ukraine carried out their first strike in a border region within Russian territory using a US missile, according to a Bloomberg report. This Ukrainian attack utilised American-made Army Tactical Missile Systems (ATACMS), manufactured by Lockheed Martin, with a range of about 300km. In other news, India’s oil products demand growth in October saw an almost 3% rise y/y as monsoon season ended, a trend that is set to continue in November due to higher vehicle sales during the festival period and agricultural demand, according to S&P Global. Meanwhile, Petrobras aims to boost spending on new oil drilling by almost 9% to $111 billion in their 2025-2029 plan, reported by Bloomberg. The plan awaits approval from Petrobras’ board of directors and is scheduled to be released on 21 Nov. Finally, after the EU and the UK imposed sanctions on Iran yesterday for allegedly sending UAVs and missiles to Russia, including freezing the assets of the Islamic Republic of Iran Shipping Line (IRISL), Iran’s Ministry of Foreign Affairs spokesman Esmail Baghaei has condemned the sanctions as affecting the “fundamental rights and interests of Iranians”. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.27/bbl and $1.09/bbl, respectively.
In the week ending 12 November, money managers added length to their positions in both Brent and WTI crude futures. Following Donald Trump’s election victory, we saw Hurricane Rafael divert course from the US Gulf Coast, leaving oil infrastructure unscathed, while weak Chinese oil demand continued to put pressure on the market. Managed-by-money players added 14.5mb (+3.6%) w/w and 42.8mb (29.3%) to their long and short positions, respectively. As a result, overall net positioning across Brent and WTI futures decreased by 27mb (-10.5%) w/w, bringing money managers long:short ratio to 2.27:1.00 compared to 2.83:1.00 for the week to 05 November
The oil market continues to be in consolidatory wait-and-see mode regarding the gap between the “drill baby drill” campaign rhetoric and actual change to the physical crude supply from the US. The lack of meaningful price movement has been clear, and open interest in the Jan’25 contract continues to uniformly drop. The prompt has been supported from trading near recent bottoms and we have seen lower highs all month, forming a wedge. As volatility is not low, Bollinger bands are not narrowing; we may need to see greater consolidation before there is a significant breakout from between the 20-day moving average and the lower Bollinger band.
The Jan’25 Brent Futures rallied this afternoon, rising from $71.44/bbl at 12:00 GMT to $73.27/bbl by 16:20 GMT before encountering resistance and retracing slightly to $73/bbl as of 17:15 GMT. In headlines, news of a power outage halting output at Equinor’s Johan Sverdrup oilfield, western Europe’s largest, with a capacity of 750 kb/d has emerged, contributing to the rally in flat price. In other news, Saudi Arabia’s crude exports rose by 80 kb/d in September to 5.75 mb/d, the highest in three months, as direct crude burning for power generation fell sharply (-296 kb/d to 518 kb/d) with the end of the summer peak. Oil production dipped slightly by 17 kb/d to 8.98 mb/d, while refinery runs hit a four-month high of 2.756 mb/d, up by 35 kb/d, according to JODI data. In other news, global natural gas demand rose by 6.1 billion cubic metres (bcm) year-over-year in September, with production increasing by 7.65 bcm, driven by Russia, the U.S., Nigeria, Norway, Canada, and Azerbaijan, according to JODI’s latest data. Inventories reached a record 251 bcm, 12.6 bcm above the five-year average, after rising by 9.9 bcm in September as countries stockpiled ahead of winter. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.27/bbl and $1.09/bbl, respectively.
The Jan’25 Brent future is trading near recent bottoms, with a wedge forming with lower highs from early October and a quite weak momentum in the bear trend shown by a negative but small MACD differential. We anticipate a short
