Distillate fuels, including diesel and jet fuel, power transportation systems and industries worldwide, driving economic activity and global connectivity.
Find live prices on Flux Terminal. Trade distillates cost-free on Onyx Markets.
The Fed has initiated the rate easing cycle, lowering its key overnight borrowing rate by 50 bps. To be sure, it was an aggressive start and underscored the Fed’s concerns surrounding employment, in contrast to its sanguine views on inflation.
After the Nov’24 Brent futures contract came off yesterday evening following the Fed’s 50 bps rate cut, flat price strengthened his morning, trading at $73.94/bbl at 07:00 BST and moving up to the $74.35/bbl handle at 11:30 BST (time of writing). The Fed cut signals the start of easing and has fostered expectations of possible stronger future demand for crude oil. In the news today, Saudi Aramco has awarded a $2 billion deal to Italian engineering group Saipem as part of the expansion of the Marjan offshore field in Saudi Arabia, expected to provide a 300 kb/d boost in production capacity by 2025. In other news, analysts at Citi stated Brent crude prices in Q4 could be bolstered by demand possibly outstripping supply in the near-term and suggested that prices could have temporary support in the $70 to $75/bbl range. However, Citi remains strong in its view that Brent is set to decline to around $60/bbl in 2025. Finally, following the explosion of thousands of Hezbollah pagers in Lebanon earlier this week, other devices including radios, laptops and even solar power cells have detonated, injuring a total of 450 people and killing at least 20, according to Al Jazeera. Israel has yet to comment on the explosions meanwhile Hezbollah leader Hassan Nasrallah is due to give a televised address at 15:00 BST today. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $1.92/bbl, respectively.
The Nov’24 Brent Futures contract was volatile this afternoon, trading at $72.77/bbl at 12:00 BST and oscillating up to a high of $73.85/bbl around 16:20 BST before correcting to the $73.15/bbl handle by 17:00 BST (time of writing). This volatility could be attributed to market players adjusting their positions, both in cautious anticipation of the US Fed rate cut this evening and in reaction to EIA data for the week ending 13 Sep, showing that US crude oil inventories fell by 1.63 mb and production was down by 100 kb/d. According to a Reuters poll, analysts had predicted a 500 kb decline in US crude inventories, indicating that last week’s Hurricane Francine may have caused a greater drawdown than expected. In the news today, Bloomberg has estimated that Russian crude oil revenues have dropped by 30% since June, largely due to international benchmark prices falling and depressing the value of cheap Russian crude. This decline in Russian crude comes despite the fact the country’s oil exports averaged 3.21 mb/d for the four weeks leading up to 15 Sep, 80 kb/d higher than the four-week average to the week of 8 Sep. In other news, as the market becoming increasingly divided on the Fed action, former Cleveland Fed President Mester has said today she favours a series of 25 bps cuts rather than a 50 bps cut. Whilst Fed funds futures predicted a 61% chance of a 50 bps cut, major brokerages now expect a 25 bps cut including Goldman Sachs, Nomura, and Deutsche Bank. Whichever move the Fed makes at 19:00 BST, either cut will likely cause further volatility in crude prices. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.76/bbl and $1.78/bbl, respectively.
Brent has recovered from sub-$70/bbl, and there has been a sigh of relief in many markets. But are we out of the woods yet?
Nov’24 Brent Futures flat price declined this morning from $73.27/bbl at 07:00 BST down to $72.65/bbl handles at 11:20 BST (time of writing). Crude prices fell alongside API estimates showing an unexpected increase of 1.96 mb in US crude oil inventories on Tuesday. This weakness came in spite of bullish factors including escalation of conflict in the Middle East and the potential for a 50-basis point Fed cut to stimulate US economic growth. In the news today, the explosive pagers used against Hezbollah in yesterday’s bombing in Lebanon were alleged to have been modified by Israel’s Mossad spy agency at the production level. A Lebanese security source told Reuters that up to 3kg of plastic explosives were hidden in the 5,000 Gold Apollo brand pagers ordered by Hezbollah. The group has communicated via Telegram today that they intend to retaliate against the Israeli attacks. In other news, US Gulf Coast oil shut-ins have dropped to 102 kb/d as output recovers after Hurricane Francine dissipated on 14 Sep. The US is also seeking to increase their SPR by 6 mb of crude amid relatively low oil prices. Finally, Russia could hold off oil export cuts in October due to domestic refineries maintenance, as per Reuters. Furthermore, Indian Oil Minister Hardeep Singh Puri has stated that India will not change its energy policy to buy oil from the cheapest supplier, indicating that India will continue to buy cheap Russian crude oil. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.69/bbl and $1.61/bbl, respectively.
Nov’24 Brent Futures flat price rallied from $72.59/bbl at 12:00 BST up to $74.20/bbl handles at 17:45 BST (time of writing). In the news today, Venezuela’s largest oil refinery, the Amuay refinery, has been reported as offline since 12 Sep due to a power failure, according to Reuters. The refining facility has a capacity to process 645 kb/d and suffers frequent power outages due to a chronic lack of investment. In other news, two Chinese refineries, Zhenghe Group and Shandon Huaxing Petrochemical Group, were declared bankrupt today after creditors failed to agree on restructuring plans for the refineries, as stated by Bloomberg. The processing units at these plants have not been operational for several months due to refinery margins plunging, particularly in Shandong. Finally, South Sudan’s President Salva Kiir has agreed with the leader of Sudan, Gen Abdel Fattah al-Burhan, to export crude oil via Sudan, following months of disrupted supply due to a damaged pipeline network amid civil war in Sudan. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.72/bbl and $1.82/bbl, respectively.
Nov’24 Brent Futures flat price weakened this morning from $73.13/bbl at 07:00 BST to $72.50/bbl at 11:30 BST (time of writing). After last week’s upward trend, prices are relatively steady amid US output concerns, countering bearish sentiment caused by lagging Chinese demand. In the news today, Fed funds futures show markets are now pricing in a 69% chance that the US Federal Reserve will cut rates by 50 basis points, as per data by Reuters. A lower interest rate could potentially lift oil demand by supporting economic growth. In other news, the UK government is intensifying its crackdown on the oil trading empire of Hossein Shamkhani, the son of an advisor to Ayatollah Khamenei, Supreme Leader of Iran. The UK is continuing to scrutinise the business practices of London-based Nest Wise Trading, owned by Shamkhani, and has warned Shamkhani’s company with immediate dissolution due to its role in trading both Iranian and Russian crude. This comes as part of a broader crackdown in the UK and US on entities believed to be evading oil-trading restrictions. Finally, US Secretary of State Antony Blinken is headed to Egypt today to prepare a proposal to present to Israel and Hamas for a cease-fire deal and release of hostages. Blinken, however, has no public plans to meet with Israeli Prime Minister Benjamin Netanyahu on the trip. The visit comes amid Israel threatening to escalate conflict against Hezbollah. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.57/bbl and $1.41/bbl, respectively.
Nov’24 Brent Futures flat price climbed this afternoon from $71.76/bbl at 12:00 BST to $72.50/bbl at 17:25 BST (time of writing). The increase in crude prices comes as players wait and watch for further directional cues ahead of the Fed meeting on 18 Sep. The market is still hindered by bearish sentiment, however, amid demand worries in China and offline capacity in the Gulf of Mexico. In the news today, there has been much speculation as to whether the Fed will cut by 25 or 50 basis points. This will mark the first US interest rate cut since March 2020. Proponents of the view that the Fed will cut by 50 bps include Michael Feroli, analyst at JPMorgan, and Bill Dudley, the former New York Fed president and Bloomberg columnist. In contrast, Satyam Panday, chief US economist at S&P Global Ratings, foresees three cuts of 25 bps, one every Fed meeting for the rest of the year. Whichever way the Fed chooses to move on rates (25 or 50 bps), it is clear that the consensus is looking for a cut in the Sep/Nov and Dec meetings. In other news, in a note by Callum Bruce, Goldman Sachs has commented on oil price weakness, with Brent slipping below $70/bbl last week. Goldman Sachs claimed that Brent crude could recover to $77/bbl in Q4 ’24, on the condition that demand concerns abate, positioning and valuation recover, and OECD inventories remain somewhat below normal. However, their analysis also highlights the risk of comfortable inventory levels allowing the market to price in an expected 2025 supply surplus, potentially hampering recovery of crude prices. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.60/bbl and $1.51/bbl, respectively.
Nov’24 Brent Futures flat price found support this morning after a relatively quiet night, trading at $72.40/bbl at 07:00 BST before it saw resistance at $72.75/bbl around 10:50 BST and eased off to the $72.70/bbl level at 11:20 BST (time of writing). In the news today, the ECB has cut rates by 25 basis points, as was expected, for a second time in three months, to 3.5%. President Lagarde has said the ECB is determined to reach its inflation target of 2% over the medium term, however, has not yet specified an exact time frame for this goal. In other news, six Exxon and Shell refineries in Louisiana have resumed operation amid little significant damage from Hurricane Francine, as per Reuters. Production outages in the US Gulf Coast caused by the storm stood at 730 kb/d as of 12 Sep. Finally, Libya’s political factions have not reached a final deal on the central bank yet, the UN mission says. Sadiq al-Kabir, ousted governor of the Central Bank of Libya (CBL), told Reuters that international banks have suspended all transactions with Libya. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.64/bbl and $1.63/bbl, respectively.
Nov’24 Brent Futures flat price saw a volatile afternoon but ultimately weakened, trading at $72.67/bbl at 12:00 BST and spiking to $73.21/bbl at around 15:25 BST, followed by a descent to $72.26/bbl at 17:30 (time of writing). The sell-off may be attributed to traders not wanting to keep long positions over the weekend, in addition to key Louisiana terminals reopening following now-tropical storm Francine. In news today, the port of New Orleans and the Louisiana Offshore Oil Port are back online, according to the US Coast Guard. Texas ports have also started accepting and servicing tankers, as per vessel monitoring data from LSEG. Meanwhile, Shell stated today that production is ramping up at five of their platforms in the Gulf of Mexico, however, the Perdido, Auger and Enchilada/Salsa platforms will remain shut due to other unspecified downstream issues. In other news, Macquarie revealed in a Friday note that its forecast for Brent crude has lowered by $2/bbl to $80/bbl for the rest of 2024, seeing potential for a heavy surplus of oil in 2025. The bank’s prediction follows both OPEC and the IEA lowering their global oil demand forecast this week. Finally, a Gazprom Neft-owned Moscow oil refinery has resumed operations, after a drone attack on 1 Sep halted production at refining unit Euro+, according to Reuters. The Euro+ unit accounts for half of the facility’s total production, with a refining capacity of 6 million metric tons of oil per year. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.59/bbl and $1.48/bbl, respectively.
Nov’24 Brent Futures flat price found support this morning after a relatively quiet night, trading at $72.40/bbl at 07:00 BST before it saw resistance at $72.75/bbl around 10:50 BST and eased off to the $72.70/bbl level at 11:20 BST (time of writing). In the news today, the ECB has cut rates by 25 basis points, as was expected, for a second time in three months, to 3.5%. President Lagarde has said the ECB is determined to reach its inflation target of 2% over the medium term, however, has not yet specified an exact time frame for this goal. In other news, six Exxon and Shell refineries in Louisiana have resumed operation amid little significant damage from Hurricane Francine, as per Reuters. Production outages in the US Gulf Coast caused by the storm stood at 730 kb/d as of 12 Sep. Finally, Libya’s political factions have not reached a final deal on the central bank yet, the UN mission says. Sadiq al-Kabir, ousted governor of the Central Bank of Libya (CBL), told Reuters that international banks have suspended all transactions with Libya. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.64/bbl and $1.63/bbl, respectively.
Nov’24 Brent Futures flat price initially dipped this afternoon, decreasing from $71.72/bbl at 12:00 BST down to a low of $71.08/bbl at 14:55 BST, before sharply rallying up to the $72.28/bbl handle at 17:30 BST (time of writing). The increase in price may have been due to a combination of new speculative long positions alongside the liquidation of existing short positions and stronger sentiment in the physical market. In the news today, Saudi Arabia is set to boost crude oil exports to China in October by around 3 mb, as Chinese state refiners PetroChina and Sinopec have asked Saudi Arabia for more supply. This could be a sign of China’s propensity to stock up on commodities at lower prices, with Saudi Arabia having reduced the price of Arab Light to Asia by $0.70/bbl for October. In other news, Giovanni Staunovo, UBS analyst, stated in a note to clients that Hurricane Francine may have disrupted the supply of up to 1.5 mb of crude, amounting to 50,000 bpd. The category 2 hurricane has since weakened to a tropical storm, decreasing from wind speeds of 100mph down to sustained speeds of 35 mph. Finally, the Kremlin has begun a counteroffensive in the Kursk region as Russian soldiers attempt to push back Ukrainian forces, corroborated by President Zelenskyy. Meanwhile, Moscow’s troops have been steadily advancing through Eastern Ukraine, approaching the logistical hub of Pokrovsk. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.55/bbl and $1.41/bbl, respectively.
Things that remind me of the 60s: tie-dye, flower crowns, the space race, psychedelics, and the front-month Brent futures contract. Bearish sentiment almost appeared omnipresent this week in Brent, with the prompt Nov’24 futures contract dipping below $70/bbl for the first time since December 2021
The November Brent Futures contract has seen stronger price action this morning, reaching a peak around $71.86/bbl at 08:30 BST before retracing slightly and again rallying up to trade at $71.83/bbl at the time of writing (11:20 BST), as major producers extend production cuts and evacuations in the Gulf of Mexico. In recent developments, the US Bureau of Safety and Environmental Enforcement (BSEE) reported that 46% of the Gulf of Mexico’s 371 manned platforms and 60% of personnel from five rigs have been evacuated, with four rigs moved off location due to Hurricane Francine. The loss of production amounts to approximately 675kb/d, and contributed to prices rising this morning, especially with Libyan production remaining largely offline but nonetheless despite bearish EIA data emerging yesterday. In other news, Saudi Aramco has signed additional agreements with China’s Rongsheng Petrochemical and Hengli Group, advancing talks on refining and petrochemical sector cooperation. Aramco signed a Development Framework Agreement with Rongsheng, exploring the joint development of Saudi Aramco Jubail Refinery Company (SASREF) and potential cross-investments. Rongsheng may acquire a 50% stake in SASREF, while Aramco could acquire 50% in Rongsheng’s Ningbo Zhongjin Petrochemical Co. Ltd. At the time of writing, the Nov/Dec and Nov/May’25 Brent spreads are at $0.55/bbl and $1.41/bbl, respectively.
The oil market saw a full capitulation this week as Brent futures fell below $70/bbl for the first time since December 2021. Gasoil continues to struggle, while gasoline found a wind of strength off the back of Hurricane Francine. Even though trading volumes are down with key traders enjoy the APPEC festivities, the show in oil swaps must go on.
