The North Sea physical differential strengthened above $0.80/bbl last week but has since petered out, dropping to $0.69/bbl on 20 Jan. 20 Jan also saw five offers for WTI Midland in the window from Eni, Unipec, Shell and two offers from Gunvor, who interestingly was buying cargoes before this. We saw no bids in the window for the first time since 3 Jan.
The Mar’25 Brent futures flat price clawed higher on Tuesday afternoon, rising from $78.50/bbl at 14:00 GMT to nearly $79.60/bbl by 16:45 GMT before falling to $79.16/bbl by 17:40 GMT (time of writing). In the news, a rare winter storm across the U.S. South has disrupted natural gas and oil production, strained the Texas power grid, and halted LNG exports. Despite the Houthis’ announced pullback, insurers remain reluctant to cover Red Sea transit due to ongoing security risks, delaying a full return to the Suez Canal route and keeping freight rates elevated, though a gradual decline is expected. Trump’s tariff threats on Canadian oil have widened the gap between U.S. and Canadian energy stocks, with Toronto-listed names underperforming as investors shy away from policy uncertainty, while analysts warn of further downside if tariffs are implemented. Serica Energy remains committed to investing in the UK North Sea despite high taxes, seeing opportunities in the market, but emphasises the need for a more sustainable tax regime to support long-term oil and gas development. U.S. energy mergers may slow in 2025 as deal sizes shrink due to fewer available targets and regulatory delays, but smaller and mid-cap producers are still expected to pursue M&A for scale, with cost-saving measures like longer laterals helping to improve drilling economics. Finally, the front (Mar/Apr) and 6-month (Mar/Sep) Brent futures spreads are at $0.81/bbl and $4.05/bbl respectively.
The Mar’25 RBOB futures outright price reached above the upper Bollinger band on 15 Jan to a high of $2.20/gal and has since corrected to $2.14/gal on 21 Jan. The cracks have been fairly robust, and the Mar’25 RBOB futures crack (RBBR) has been gaining strength slowly this month as it rose from seeing support at the lower Bollinger band on 10 Jan to seeing some trepidation at the 20-day moving average on 20 Jan, although it broke past this on 21 Jan, to $10.35/bbl at the time of writing.
Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in distillates, gasoline, and LPG 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 Mar’25 Brent futures contract has been on a downward trajectory since hitting an overnight peak of around $80.45/bbl at 0220 GMT, trading steadily down to $79.00/bbl at 1050 GMT (time of writing). Crude oil prices saw bearish sentiment after US President Trump declared a national energy emergency yesterday as part of his plan to boost domestic oil and gas production. In his first day in office, Trump signed an executive order repealing Biden’s efforts to block oil drilling in the Arctic and US coastline, also stating he intends to fill the SPR “right to the top”. In addition, Trump ordered the US withdrawal from the Paris climate deal and suspended new federal offshore wind leasing. In the news today, President Trump said he planned to impose previously threatened tariffs of as much as 25% on Mexico and Canada by Feb 1, due to the fact “they’re allowing vast numbers of people” into the US, as per Bloomberg. In other news, Indian refiners MRPL and Bharat Petroleum Corp issued tenders this week seeking crude oil after US sanctions on Russian crude. MRPL issued its first crude import tender in more than a year, seeking offers of 1-2mb to be delivered 16-28 Feb, open to offers of both sweet and sour crude, as per Reuters. Meanwhile, BPCL is seeking 12mb of Abu Dhabi’s flagship Murban crude in an annual tender, planning to buy 1mb per month from April 2025 to March 2026. Finally, at the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $0.86/bbl and $4.17/bbl, respectively.
The Mar’25 Brent futures contract started to recover this afternoon, strengthening around 50c since this morning up to $80.93/bbl at 1325 GMT. However, Brent flat price then sold-off at US open (1330 GMT) down to $79.45/bbl around 1400 GMT, retracing to $80.08/bbl at 1750 GMT (time of writing). Crude oil prices have continued to decline as traders anticipate policy announcements from US President Donald Trump, including plans to boost domestic oil production and resolve the Russia-Ukraine conflict. In the news today, Chinese crude imports from Russia rose by 1% y/y to a record high of 2.17mb/d, data from the Chinese General Administration of Customs showed. Higher imports from Russia potentially demonstrate Chinese refiners’ appetite for cheap cargoes amid weak refining margins. Meanwhile, crude imports from Saudi Arabia dipped by 9% y/y to 1.57mb/d. In other news, Chevron has expressed interest in oil and gas exploration offshore Greece, the Greek Ministry of Energy and Environment stated today. Greece said that it would imminently announce an international tender and decide on the particular area designated for exploration this week. Finally, the cost to hire an oil supertanker on key routes to China has doubled since the newly imposed US sanctions on Russia, as per Bloomberg. Daily rates for VLCCs on the Middle East-to-China route (TD3C) surged 112% to $57.6k in the week to 17 Jan, while rates on the US Gulf-to-China route (TD22) soared 102% to around $55.5k. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $0.99/bbl and $4.70/bbl, respectively.
Bye Bye Biden The M1 Brent futures contract surged to its highest level since July last week but has since softened to $80.80/bbl at 12:45 GMT (time of writing). We expect the M1 contract to end the week between $78
In the week to 20 Jan, the Mar’25 Brent futures saw a narrow trading range, with prices correcting from overbought levels, closing at $80.50/bbl as bullish momentum slowed (RSI dropped from 84 to 66). Open interest declined sharply, likely due to profit-taking and hesitancy ahead of President Trump’s inauguration.
In the week ending 14 January, money managers got longer in Brent but reduced length in WTI futures. Combining both crude futures benchmarks, money managers had a risk-on week as they added 31.7mb (+5%) in longs and 15.0mb (+11.6%) in shorts. Given the larger proportional increase in shorts, the long:short ratio was pressured down from 4.82:1.00 to 4.53:1.00 w/w (54th percentile for all weeks since 2013). In contrast, their net positioning increased from 492mb to 508mb w/w, marking a third consecutive week of increase and the highest level since April 2024.
The Mar’25 Brent futures contract has been on a decline since 16 January, continuing to fall this morning from just under $80.70/bbl at 0610 GMT down to $80.17/bbl at 0955 GMT, before recovering to $80.40/bbl at 1045 GMT (time of writing). Bearish sentiment in crude oil prices was driven in part by official data showing an average 1.15mb/d surplus in China’s crude oil inventory levels for 2024, up from 760kb/d in 2023, according to Reuters. In the news today, President-elect Trump is due to be sworn in as the 47th president of the United States this afternoon. Trump is expected to sign around 100 executive orders during his first days in office, which could include opening up federal lands to drilling and energy exploration. In addition, Trump is preparing to declare a national energy emergency as part of his plan to boost domestic energy production and reverse President Joe Biden’s climate change policies, as per Bloomberg. In other news, the director general of Turkish Petroleum, Ahmet Turkoglu, stated that the company is ready to invest billions in developing offshore oil fields in Libya, speaking at the Libya Energy and Economic Summit in Tripoli. Turkoglu stated the funds could be invested in exploring new blocks and improving the performance and efficiency of current fields. Finally, a gasoline tanker exploded in north-central Nigeria in the early hours of Saturday, with the death toll estimated at 86. The blast happened near the Suleja area of Niger state after gasoline was attempted to be transferred from a crashed oil tanker into a truck using a generator, according to Bloomberg. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $1.14/bbl and $5.13/bbl, respectively.
The Mar’25 Brent futures contract weakened further this afternoon, falling from $81.35/bbl at 1200 GMT down to $80.57/bbl at 1600 GMT, before recovering to $81.15/bbl at 1755 GMT (time of writing). Crude oil prices have faced some downward pressure as geopolitical tensions in the Middle East ease, following Israel’s security cabinet’s approval of the Gaza ceasefire deal. In the news today, China’s oil refinery throughput in 2024 saw its first decline in over two decades excluding 2022, as refineries scaled back operations amid stagnant fuel demand and weak margins. Throughput dropped 1.6% year-over-year to 14.13 million barrels per day. In other news, a Reuters review of US sanctions showed six Russian oil tankers still under construction were included, the first time Washington is known to have banned tankers before they set sail. In addition, Russia’s exports of refined oil products fell by 9.1% y/y in 2024 to 113.7 million metric tonnes amid drone attacks on refineries and export bans. Finally, Italy’s natural gas consumption fell for a third consecutive year in 2024, dropping by 2.5% to the lowest level in more than 15 years, power market manage GME stated. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $1.21/bbl and $5.37/bbl, respectively.
In High Sulphur Fuel Oil (HSFO), the 3.5% barge complex weakened into the new year. The Feb/Mar’25 3.5% barge spread dropped from $4/mt on 27 Dec to a contango of -$1/mt on 14 Jan. While this contango was short-lived, the spread remains pressured and was seen at $1.25/mt on 17 Jan (at the time of writing). Coupling this with a stronger crude, the Feb’25 3.5% barge crack fell from -$5.60/bbl on 27 Dec to -$7.70/bbl at the time of writing. The crack has also seen significant sell-side interest from trade houses (who flipped from being net buyers on 8 Jan), end users, hedge funds and banks. In Asia, the Feb/Mar’25 Singapore 380 cst spread softened at the start of the year but rallied from $2/mt on 7 Jan to $7.50/mt on 17 Jan amid increased trade house and major buying. Accordingly, the Feb’25 380 East/West (380 vs 3.5% barges) surged up to $25.75/mt on 17 Jan. The differential between 180 cst and 380 cst fuel oil (Visco) in Feb’25 declined from $8.25/mt on 3 Jan to $6.50/mt on 17 Jan (at the time of writing).
Brent Consolidates Above $80/bbl Brent crude futures maintained their strength above the $80/bbl handle this week, amid supply tightness fears following the Biden administration’s sweeping sanctions targeting the Russian oil industry. As of 13:00 GMT (time of writing), Mar’25 Brent
The Mar’25 Brent futures contract has seen gradual weakness this morning, declining from just under $81.90/bbl at 0520 GMT down to $81.65/bbl at 1055 GMT (time of writing). In the news today, Yemen-based Houthis have signalled a pause in their months-long attacks on commercial ships following the Gaza ceasefire deal, as per Bloomberg. Houthi leader Abdulmalik Al-Houthi stated that the group would follow the stages of implementing agreement, but also that they are ready to provide military support to Palestinians in the event of “any Israeli breach, massacre, or siege”. In other news, Indian Oil Corp has bought 7 mb of spot Middle Eastern and African crude to replace sanctioned Russian crude, including a rare 2mb purchase of Abu Dhabi’s Murban crude sold by Totsa, according to Reuters. Other purchases included Nigeria’s Agbami and Akpo crude and Gabon’s Rabi Light. Meanwhile, OPEC’s share in India’s crude oil imports in 2024 increased to nearly 51.5% from 49.6% in 2023, rising for the first time in nine years, as per Reuters. Finally, China’s GDP expanded by 5.4% y/y in Q4’24, surpassing market forecasts of a 5.0% rise and accelerating from 4.6% growth in Q3’24. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $1.37/bbl and $5.69/bbl, respectively.
Mar’25 Brent futures saw oscillating price action this afternoon, increasing from $81.20/bbl at 1230 GMT to nearly $82.00/bbl at 1425 GMT, before falling to $80.45/bbl at 1630 and recovering to $81.45/bbl at 1745 GMT (time of writing). In the news today, a strategic cooperation agreement between Russia and Iran will not include a mutual defence clause like those Russia has signed with North Korea and Belarus, according to TASS citing an Iranian envoy. In other news, advisers to President-elect Donald Trump are readying a wide-ranging sanctions strategy to facilitate Russia-Ukraine diplomacy in coming months while at the same time squeezing Iran and Venezuela, Bloomberg reported. One set of policy recommendations suggested good-faith measures to benefit sanctioned Russian oil producers, on the condition that an end to the Ukraine war is in sight. Meanwhile, a second recommendation proposed to ramp up pressure by building on the sanctions. In addition, Scott Bessent said the US is poised to increase sanctions on Russian oil companies to force them to the negotiating table with Ukraine, according to Financial Times. Finally, BP plans to cut some 4,700 jobs and 3,000 contractor roles this year to reduce costs, the supermajor told Reuters. These cuts would be equal to around 5% of the global workforce of around 90,000 employees at BP, aiming to cut at least $2 billion in costs by 2026. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $1.40/bbl and $5.72/bbl, respectively.
