The Official Reports

We’ve got used to Asia selling and Europe buying. But today started the opposite to usual; Asia boosted prices to significantly retrace the slip late yesterday evening. Brent flat price reached as high as $72.75, briefly. But Europe came in and knocked it back down a peg towards $72.30. The Europeans had a slow start but by 09:00 they were up and swinging, sending flat price back up again! Back to almost $73 in half an hour. Flat price just can’t decide which way to go! But we
have to observed some strengthening on the back of positive Chinese oil import stats. Today’s Dubai window was cagey and many bids and offers went unanswered, being withdrawn after the window’s close. One aspect of the window trading we’re becoming accustomed to is seeing Exxon as the primary seller. Again, it was hitting bids whenever they came up high enough. Most trades were made up of sellers smacking buyers’ bids and buyers only managed to lift a few offers here and there. As ever, Totsa was chucking in plenty of bids and was joined by Glencore and Mercuria. BP also showed up bidding, like Hengli, though the latter couldn’t keep pace and didn’t pick up a partial.

The window was more dynamic than ever! December’s been pretty crazy but today they cranked it up another notch. Bids and offers were flying left, right and centre. Trafi and Totsa were bidding heavily, while Equinor was offering a plethora of grades for yet another session. The Norwegian major was still trying to shift a 22-26 Dec Sverdrup, offering it down to $1.30 under Dated, but found no taker even there. It had more luck with its Midland offering. Once again, Trafi was hungry for Midland and swept up Equinor’s offer of a 5-9 Jan Midland at Dated +$1.95 as soon as the Norwegians lowered that far. That wasn’t enough Midland for Trafi, which kept bidding, looking for a 1-5 Jan cargo at Dated +$2.00 and another 27-31 Dec for the same price. It threw in a bid for a 1-5 Jan Midland at $2 over Dated too.

Oil prices soften as parts of the world burn. It is a free for all fight where every party is trying to grab what they can. Human disaster. The Syrian situation appears to be spiralling. The power vacuum resulting from Assad’s fleeing has seen lunges for influence by numerous parties. Israeli troops have grabbed more of the disputed Golan Heights as Syrian soldiers abandoned their posts in the aftermath, and now Syrian security forces have said the Israelis are approaching Damascus itself. An Israeli military spokesperson has denied the entry into Syrian territory proper and said operations have remained within the buffer zone as a defensive manoeuvre. Other regional powers have condemned Israel’s alleged land grab, but they all have their own interests in the new order too.

Well that didn’t last long. A brief test of $71 ended when markets decided prices weren’t high enough and they quickly pierced the $72 handle, and the Americans kept the momentum going. Feb Brent closed over a dollar up, at $72.41/bbl. Back in the $72-75 comfort zone, as geopolitical risk comes back to the fore, never mind the bearish fundamentals. Last week’s pattern looks set to continue. Equinor is still selling heavily in the North Sea, offering cargoes across grades: Ekofisk, Troll, Oseberg, Johan Sverdrup and Midland were all on the menu today. Trafi was bidding for Midland and, once it had increased its bid to Dated +$2, Equinor made the most of it. That didn’t stop Trafi from continuing to bid for more of the same, raising a 27 Dec-1 Jan Midland to Dated +$2.05. Trafi also went in bidding for Troll and Ekofisk. Eni made an appearance, lifting a Midland from Equinor at $2.05 over Dated. Equinor has really been covering all bases and offering all sorts in December’s North Sea windows so far. Totsa was relatively quiet in this afternoon’s window, only bidding for three Midlands ranging from end-Dec to early-Jan at around Dated +$1.80, after its frantic bidding and buying last week.

As we expected, Saudi Arabia cut OSPs for Asia. They did the minimum we prophesised on Friday, cutting Light grade prices by 80c, while Medium and Heavy each received a 70c chop. Will that be enough to entice back Chinese buyers who had been going to the spot market and looking to other suppliers, such as West African producers in the past month. There could be more competition for China’s attention, however. As the Assad regime crumbles, Iran’s crude exports to its old Syrian ally are set to unwind. TankerTrackers spotted that a tanker set to deliver 750 kb of Iranian crude to Syria did a 180 turn in the Gulf of Suez. The cancellation of exports from Iran to Syria now that Iran’s pal Assad has been ousted will free up around 60 kb/d of crude, which will need a buyer from Iran’s reduced list of customers – more competition for the lacklustre Chinese demand?

THE RUSSIANS ARE BACK!! Watch out North Sea guys, they are coming and are hungry! In the window, Litasco picked up a Midland from Gunvor for 6-10 Jan at Dated +$1.95. Other than that, it was back to normal December service. After the caginess in yesterday’s window, the tantalising trio wasted no time in getting down to business today. No sooner had Equinor offered Forties than Trafi gobbled it up, earning itself a 4-6 Jan at Dated +$1.45. Trafi also got a Ekofisk for 30 Dec – 1 Jan at Dated +$1. Totsa was back with its old comrades, buying a 29 Dec-2 Jan Midland at $1.95 over Dated. Once Totsa had lifted the first Midland from Equinor, the mighty Vikings pulled back and withdrew their other Midland cargo. Evidently, they just wanted to get one off their hands. Totsa wasn’t satisfied with only one Midland, and also collected a 24-26 Dec Troll (a rare find in the window) at Dated +$2.25 and a 20-22 Dec Oseberg at Dated +$2.05, both from Equinor. Equinor was also offering its Johan Sverdrup again, but nobody could work up the interest to take that one off their hands. The North Sea trifecta has dominated the window this week and we’re wondering if they can keep it up deeper into December. BP’s been bullied out after its dip into the Sea yesterday This week we have seen 19 cargoes done, wow!

Just as we said, we are 60s people and prices are softening. Time to grow your long hair if you have any left old guys and for the young buy some flared bottoms trousers. We are almost there. Strangely, physical has been strong, and look at recent activity in Dubai and more importantly in Brent but the line of travel is weak. We saw on TV the Saudi energy minister selling the narrative of why they had to kicked the can down the road and he didn’t look happy. Who would be? As the dust swirls around OPEC’s delay, Brent flat price drifts lower, into the low to mid-$71 range. Hey, the Saudis and OPEC have got to save face. And yesterday at the superbly timed press conference, the Saudis wheeled out more propaganda to support the decision. But they’re clearly keen to pump; they’re investing in new capacity – Aramco just awarded three offshore deals worth over $500 million! For what… not to use it? Unused equipment degrades over time, and incurs maintenance costs, so why bother investing billions to boost capacity if you’re not going to pump it?

More of the same from OPEC at its meeting as it delays unwinding voluntary and collective production cuts. More dilly dallying. More procrastination. What’s new? Well, the leaks are only getting worse as member states get fed up waiting for a release of barrels and jumping the gun. Lots of up and down action ended with Brent at $72.13/bbl at the close. And one source says, it is not a million b/d excess production from the UAE, it is only 400 kb/d. Hahahah! OMG, we had to laugh. The window was another déjà vu, as Trafi and Totsa kept up their aggressive bidding, each one looking for Midland, while Equinor offered both Johan Sverdrup and Midland. In the Midland, the buyers and sellers couldn’t find a middle ground, with quite a wide spread between bids and offers. Trafi and Totsa were reluctant to raise their bids above Dated +$1.75, waiting instead for Equinor to come and meet them. The Norwegians brought down their 21-25 Dec to Dated +$2.20 (rather high in our view) but gave up there and withdrew. Their offering of 26-30 Dec Midland at $2.15 over Dated went unanswered, as did those for Oseberg and Johan Sverdrup. BP also showed up, offering an Ekofisk at Dated +$1.50, but that wasn’t picked up either. We ended up not seeing a single trade – for the first time this month!

OPEC kicks the can down the road while the market mercilessly nibbles away at its market share! They postponed the unwinding of production cuts by 3 months to April 2025, while the original production quotas have been extended until the end of 2026. Figments of feverish imagination surely. And markets were listening closely to any chatter escaping the meeting room. The market dumped $1 as soon as the meeting began! Markets reversed a little on news that the original 2 mil b/d quotas would be extended until the end of 2026, and flat price Brent recovered into the $72 range to settle near the $72.51/bbl close of the Asian session. But things are soft, the market can be steered a little bit, but at the end of the day reacts to demand and…supply! The OPEC 8 announced another meeting on 10 December, to make sure we keep thinking about them, not that it will reveal anything meaningful. The cheating is getting worse but OPEC’s secondary sources… hello. complicit media, why do you want to report low production numbers? Come on, we all can count barrels, can’t we?

This afternoon, things looked primed for round two of pre-Christmas cheer after this morning’s jumpiness. But after lunch, markets took a turn. Flat price fell from around $74, gradually declining deeper into the $73 range and finally closed at $73.34/bbl. There was a minor interruption after the EIA’s weekly data showed a 5 mil bbl draw on national crude stocks. But this did little to arrest the momentum of the afternoon’s price action. It even kept going after the window, troubling $73/bbl. A sudden dump just before 18:00 dropped prices from $73.20 to $72.46/bbl by 18:20 GMT.

The Officials is starting a new Currency Index, ODX™, designed to reflect the financial conditions for major energy
importers in Asia. Four countries are the import leaders in the region: China, India, Japan and South Korea. ODX ™ is composed of the Chinese Yuan, the Indian Rupee, the Japanese Yen and the South Korean Won on the following percentages: Yuan 50%, India 25%, Yen 12.5% and Won 12.5%. The ODX™ is an index with an inception 100 basis set on 2 January 2024. Any subsequent rise, from that date, of the value of the US dollar relative to those major Asian oil importing currencies would lead to a rise in the ODX™. This is precisely what has happened this year.

If you’re scratching your head wondering at the major flat price rally this afternoon, worry no more! The US Treasury announced the imposition of sanctions on yet more (35!) vessels and entities involved in Iran’s “illicit” oil trade, as the uber legal, no pardon for anyone US would say. These include Iran flagged ships alongside Guyana registered vessels and the Ceres I from São Tomé and Príncipé. From the mid-$72 range at lunchtime, we climbed towards the high $73/bbl level by late afternoon. There’s reason behind chaos! (OFAC sanction list: https://home.treasury.gov/news/press-releases/jy2734)

After yesterday’s selloff, Europe lurched out of bed and jumped up at 08:00 GMT. Early European trading saw Brent build back up into the mid-$72 range and Singapore closed today’s session at $72.39/bbl. It doesn’t like being so close to $70 just yet, but flat price should get used to going lower. It’s got to go that way! So, what’s up for oil prices in the remainder of 2024? Well, according to traders, prices are very well supported at the $70 level. There has been a resurgence in some macroeconomic indicators, as US importers look to get ahead of incoming protectionism under Trump. Containers delivered into Long Beach and Los Angeles jumped to near record highs in October at 950k. Looks bullish right? But the benefits of this front loading are already behind us; a cargo ship can take up to 49 days to reach the US after setting sail from China, so there’s little upside potential there. You’ve got to get ahead of the curve to avoid getting whacked with the tariff club. When Trump comes in on the 20th January, it will likely only be downhill from there, even if we think it would be political suicide to whack Canadian oil with tariffs.

Trafi had a hard time today, facing charges of some payment peccadillos in Angola. Earlier, the company had blamed a dead man, wouldn’t you? Whatever’s going on in Switzerland didn’t deter them from declaring war in the North Sea, or whatever the word should be. You have to get it out of your system somehow. Alongside the other T, Totsa, Trafi was bidding all over. Trafi and Totsa, they’re the T x 2. T-Rex 2 come in and devour Midland. We’ve never seen a North Sea window like this. We could call it a day of infamy or Cyber Monday flash sale. Read and you decide…

We are starting effective Dec 1, 2024, a listing of key cryptocurrencies, major commodities to enable you see the larger financial and industrial sectors, global financial indices and temperatures across many key locations. We are also quoting a ‘Mini Bitcoin’ ™, reflecting the value of a 100,000th part of a Bitcoin. Bitcoin and other cryptocurrencies have become of age and are starting to become part of some countries reserves. We have also heard of trading payments in Asia being settled in Bitcoin. So, Bitcoin time has arrived, and we have jumped on the bandwagon. We are quoting some key commodities: Brent, WTI, Dubai and products among others in ‘Mini Bitcoin’ or omBTC for short. At today’s launch, Brent closed at $72.51/bbl equating to omBTC 74.25/bbl. We produce two versions of The Officials, a close of Asian markets edition and one at the close of Europe. The commodities, currencies and indices reflect their respective close of Asian and European markets. The temperatures reflect noon local time at each location. We hope these innovations in benchmarking help you make better and more informed decisions. Bookkeeping for all your operations in the derivatives markets should be easier. More complete and of course accurate!
For questions and answers please call us at +447817149889 or by email to jmontepeque@onyxcapitalgroup.com, or theofficials@onyxcapitaladvisory.com