The Official Reports

The Brent futures structure got slammed with tumbling flat price. Front month Brent spreads are down to just 19c this morning. And Dubai went along for the ride too. The Dubai physical premium tumbled to 47c – the lowest since early June! Despite Totsa’s valiant efforts, channelling the spirit of Verdun in this morning’s window, Unipec’s incessant bid hitting forced physical premiums down. Someone’s in the money and someone’s getting shafted. With the average physical premium for November falling to just 65c after today’s weakness, Totsa looks like it miscalculated with all its buying in October, when the physical premium was above $1.50! Sellers are in command once again.

The sucker got pushed off a cliff when Europe got fed up with such high prices and decided it was time to give it a good kick in the pants. And so went Brent flat price… down the rollercoaster, We’d be terrified to take such a ride. Precipitous is the only way to describe it. Europe didn’t like trading with a $74 price tag and decided $72 would be more fun. Or even $71 by late afternoon. Are the 60s calling for Brent again? For a third, conclusive time? La tercera es la vencida. Team America didn’t turn up and flat price kept going lower. Eventually, battered and bruised, it reached Europe’s close at $71.88/bbl.

OMG, China is weak! China’s Saudi December allocations are down. What happened there, is demand down -IT IS- or the Saudis prices are too juicy? Well, that too! Headline buyers and partners Rongsheng only bought full allocation and nothing extra. ‘We bought our full allocation,’ said a source. PC also disappointed with only two million bbls! This is bad.
Total allocations are a meagre 36.5 mill bbl, down from previous months. November’s allocation to Rongsheng was actually only 12 mill bbl, rather than the originally reported 14 mill bbl. This puts last month’s total at 38.5 mill bbl and December’s total to 36.5 mill bbl, while September and October saw 43 and 45.5 mb, respectively. I almost see a cat with the legs sticking up in the air! This isn’t painting a picture of overwhelming crude demand! EVs keep on crunching gasoline demand, and diesel is bad too. Just a bad story. One source believes the lower allocations will see refineries going to the spot market to get top ups. If they don’t, the ghost of the black cat will smile at us and float away. 👻 PetroChina is not disappointing, they couldn’t get enough Dubai last week. They were really guzzling. Also recall that PetroIneos, PetroChina’s joint venture with Ineos, has bagged 6 cargoes in the North Sea window so far in November.

Trends exist to get bucked. Today the yanks gave up their bullish ways. A tearing dump at 15:00 threatened a line of resistance at $74 and finally sent flat price down into the mid-$73 range and it consolidated to close at $73.57/bbl. The last few days have been divided between weak flat price action in the morning, followed by a rally as the Americans came in for the afternoon stint and sent it back upwards. The North Sea window was hectic but we got some bids! Mitsui offered a Forties for 27-29 Nov at Dated +$0.50, while BP played to both sides for different grades: bidding Sverdrup at -$1.75 over Dated, which Equinor hit, while its offer of a 7-9 Dec Brent at Dated +$0.40 went unanswered. Eni is still trying to shift its Ekofisk, lowering a 25-27 Nov to Dated +$1.10. Gunvor’s offer of a Midland at $1.35 over Dated was lifted by PetroIneos – yet another cargo for the thirsty British-Chinese venture. That makes 6 in November. Remember PetroChina’s been buying lots in Dubai too. Phillips was still offering a Midland, down to Dated +$1.40 but didn’t find any takers.

We were waiting for what seemed like forever, but China’s fiscal stimulus is finally here and they’ve thrown the kitchen sink at it. China announced 10 trillion yuan for refinancing local government debt. Financing debt with debt. No risks to see here. They will raise the local government debt ceiling to 35.52 trillion yuan and are enabling the issuance of 6 trillion yuan in special bonds. Possibly panicking having seen the FTSE A50 Index futures nosedive over 5%, officials later announced an additional 4 trillion yuan. What could possibly go wrong? 5% GDP growth must be achieved. No matter the cost. But Trump Tariffs are coming. Standard Chartered and Macquarie said 60% tariffs from Trump could damage Chinese GDP by 2%. The export-driven economy is really dependent on US customers: 15% of China’s 2023 exports (that’s $500 billion by the way) headed across the Pacific to American importers, according to UN data. That’s a big slice of the pie.

A general downtrend through the morning shifted into reverse when the Americans woke up (again). Flat price got choppy – they’re less decisive about where they want their oil price than who they want as president! A foray beyond $75 before the window was partially pared back by the close, but Brent held on to end the day at $75.09/bbl. Post-window, it climbed again, towards the upper-$75 range. The bears are ever more numerous. Citi expects prices to tumble with a Trump presidency. The big bank now expects Brent to average $60/bbl next year. It thinks a second term for Trump will be bearish by relaxing the regulatory environment: reversing Biden’s increases to royalties, costs for minimum bids and lease rates on Federal lands highlighted as important drivers. According to Citi, Europe and China are particularly “exposed” to the risks of a blazing trade war. Citi had already been projecting only around 700 kb/d of oil demand growth this year, so it’s not like they’re new to the bearish camp, but they’ve doubled down on their position.

The giddiness from the Chinese stimulus continues across many markets. INE contracts have risen, fuelled by retail demand and this has opened the arbitrage to deliver Middle Eastern crudes into the INE qualified tanks. Such Arbs have led a lucky few like Vitol and Totsa buying relatively cheap Abu Dhabi grades to deliver into China. Of course, some Chinese sources complain, and they use the M word. But maybe in this case it’s in reference to the small retail guys
The Dubai window saw the Chinese come to the fore. PetroChina seized the role of biggest bidder, lifting offers from anyone and everyone. As is becoming customary, Unipec was a big seller and today and these two were rewarded: Unipec declared an Upper Zakum cargo to PetroChina. Shenghong joined in on the sellside again, while Totsa finally seemed to get tired out, collecting just a few partials, as did Equinor. As ever, Exxon was firmly on the sellside and hit numerous bids, while Trafi and Reliance also dished out a few. The Dubai physical premium has tumbled into November from its heights, where it averaged $1.53, but has slid to an average of $0.70 in November so far.

Now we’ve had our fill of democracy, the hysterical clamours from all sides about the US election will hopefully subside soon, as the world assesses another 4 years of Trumpism. Team America seemed buoyed by the election news and sent flat price up on a $2.50 rally from lunchtime in the UK, undoing the Asian and European traders’ efforts to sink the price. Just short covering or soon-to-recede waves of optimism? A 2.1 mb build in crude stocks shown by the EIA was a stumbling block for the afternoon rally flat price had been enjoying, but it quickly overcame a small dip. The inventory stats are most interesting as a longer-term trend. Overall, since the week ending 27 September, despite a couple of minor draws, US crude stocks have risen a total of 14.615 mb. Cushing is up just over 3 mb in the same period. That’s not giving signs of a country thirsty for more oil! After a sizeable 2.71 mb draw in gasoline stocks last week, these rose alongside crude inventories, up 412 kb.

TRUMP IS IN! He’s claimed victory ahead of the boring suits that could not bring themselves to stating it when it was already obvious. Wisconsin’s result confirmed the win, pushing him over the fabled 270 electoral votes. And the Republicans look set for the hattrick: Trump as president, a majority in the Senate and a likely majority in the House of Representatives too. A hole in one for the golf-loving returning president. International leaders have joined the customary chorus of congratulations. Modi’s heartiest congratulations, Starmer calls it historic, NATO leadership… they’re all at it. Israel’s Netanyahu seemed particularly gleeful, announcing Trump’s win a “huge victory!” But is there trouble in paradise? Last night, Netanyahu fired Defence Minister Yoav Gallant, a stubborn thorn in the Prime Minister’s side. Iran, meanwhile, doesn’t seem to think the election will change much for them. Wishful thinking or calling his bluff? We saw aggressive sanctions against Iran in Trump’s first term, which could well return. And don’t forget the biggest open festering wound of all, the Ukrainian war. We hope things cool down a bit! Young men and civilians will thank Trump for sure, maybe even worship him!

Debate and speculation should soon come to an end. From Trump’s criminal trial and expecting Biden to stand for a second term, to Trump’s post-assassination attempt defiant fist raised photo and potentially the first ever female US president. So many models and projections, voter sampling and interviewing. Betting odds versus polling. It all comes down to today. This is the most important election of our lifetime. Hang on, didn’t they say that in 2020? And 2016. And probably 2012 and 2008. Essentially, it’s important. Expect fireworks, and not only in the UK for Guy Fawkes night. The US election is reaching its crescendo after months of build-up and anxiety. We’re sure more than a few grey hairs owe their discolouring to the stressful lead-in. On the final European close before the election, Brent ended at $76.01/bbl but quickly sold off to around $75.50/bbl.

Brent surpassed $75 yesterday and consolidated those gains today ahead of the US election. It finally closed at $75.26/bbl and rose further after the window. OPEC is surely punching the air. Its announced postponements and dillydallying to returning supply appear to be paying off. But they can’t stave off the inevitable forever. Despite those promises to delay unwinding of cuts, Iran is gearing up to bolster production. The Iranian Economic Council approved the financing of an “urgent” boost to crude output by 250 kb/d, though didn’t provide a timeframe for the increase. We guess Chinese teapots are thirsty for more cheap crude given struggling margins, as 2025’s import quotas just rose. And it’s good for Iran too; it gets to sell more oil!

The gap between the two US presidential candidates has been closing in both the betting market and polls. FiveThirtyEight shows a 1 point Harris lead on average, where just last week she was 1.4 points ahead. In the betting odds, Polymarket is showing a 58.1% chance of a Trump triumph, 10% lower than last Thursday… it’s like someone is scripting this to go down to the wire. Harris looks set to win the popular vote, according to Polymarket, but it doesn’t matter how many people vote for you if they’re in the wrong place. Many analysts have given a lot of credence to betting odds, so it’s crunch time to see if that confidence was misplaced. The Dems beat Trump to something: 20 states saw gasoline prices fall below $3/gallon!

OPEC caught us on the blindside with its extension of voluntary cuts, kicking the oil can down the road to at least the end of December. They’ve entrenched themselves in defence of the $70 line, declaring: “No pasarán!” Or is it the $75.00 line? And the markets liked it, with flat price opening around $1.40/bbl up from Friday’s close. OPEC must have enjoyed October’s increased oil prices, pumped up by geopolitical anxieties, and decided it wanted to keep them there. A similar announcement in September provoked little price reaction, as most market participants expected the cuts to be extended, but were more divided for the progression of OPEC’s supply this time. Crucially, in September, they announced a 2 month extension – this time it’s 1 month. Members’ patience is thin; they want to sell crude and they need money!

Brent flat price saw a choppy day as the geopolitical risk premium was reignited. We oscillated between $75 and $74 for most of the day. But then the Americans came in and decided the price was too high so sold it down to $73.50. They clearly saw Iran’s promise to hit Israel at the “appropriate time and manner” as an admission an attack wasn’t imminent. After all, we eventually closed at $73.46/bbl. How low will we go once this geopolitical risk premium finally dissipates? The fundamentals don’t look good, whoever you talk to. The stage is set to send this sucker down.

A surge upwards on reports Iran would retaliate against Israel yesterday evening set us up to begin November above where we expected, as prices shot up faster than a ballistic missile launch. Markets are still very twitchy hearing headlines about dangerous geopolitical developments. And once the Europeans woke up, they wanted to get in on the action, spurring Brent flat price to almost $75/bbl by 08:45 GMT. A post-window selloff, however, saw it fall back towards $74 before midday.