Distillates

After weakness this morning, the Dec’24 Brent futures flat price recovered this afternoon. Trading a touch above of $71.00/bbl at 12:35 BST, flat price tested the $71.80/bbl resistance level multiple times before finally breaking through around 15:45 BST and reaching $72.25/bbl at 17:30 BST (time of writing). This price action may reflect the increased risk of conflict escalation in the Middle East as Israel threatens a ground invasion in Lebanon. In the news, Libya’s halted oil production is expected to gradually resume on 1 Oct, according to Italian news agency Agenzia Nova. In other news, imports of Iranian crude into China are set to reach a record high of 1.79mb/d for the month of September, according to ship-tracking data by Kpler. Finally, amid a dispute dating back to the 1970s over oil-rich islands in the Gulf of Guinea, a hearing has begun between OPEC members Gabon and Equatorial Guinea at the International Court of Justice to settle maritime boundaries and sovereignty. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.28/bbl and $0.72/bbl, respectively.

The Dec’24 Brent futures contract was initially rangebound between $71.00 and $71.50/bbl before dipping to a low of $70.93/bbl around 14:45 BST and strengthening shortly after up to around the $72.00/bbl level at 17:30 BST (time of writing). In the news today, Israeli Prime Minister Benjamin Netanyahu, speaking to world leaders at the UN General Assembly in New York, has vowed the IDF will continue its bombardment of Hezbollah targets in Lebanon and decisively announced there would be no immediate truce. Netanyahu dedicated part of his speech to threatening Iran, stating “there is no place in Iran that the long arm of Israel cannot reach”. In other news, labour strikes at major East and Gulf Coast ports in the US are due to start early next week, with a total of 14 ports and some 25,000 workers involve, according to the United States Maritime Alliance. Finally, Indian refiners are expected to raise their total refining capacity by up to 800 kb/d by the end of the fiscal 2030 year, boosting their base capacity up to 5.92 mb/d, according to data from Crisil Ratings. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.32/bbl and $0.74/bbl, respectively.

The Dec’24 Brent futures contract began the afternoon weaker, falling to $70.40/bbl at 14:50 BST. While this level brought in support for the soon-to-be-prompt contract, which climbed to $71.60/bbl as of 17:00 BST, it ultimately softened to $71.00/bbl at 17:35 BST (time of writing).

After a relatively stable morning, price action in the Nov’24 Brent futures contract saw weakness and volatility this afternoon. Initially oscillating between high $73 and $74/bbl handles from 12:00 to 17:00 BST, price action then plummeted at 17:18 BST by 58c down to $73.23/bbl at 17:25 BST (time of writing). In the news today, EIA data released at 15:30 BST today for the week ending 20 Sep showed that US crude oil inventories fell by 4.47 mb, or more than expected and about commensurate with yesterday’s API figure. The decline was greater than the draw in the previous week, when crude stocks fell by 1.6 mb. In other news, according to Reuters, economists at Standard Chartered and HSBC have doubted the efficacy of the Chinese central bank’s stimulus package, claiming that China’s new monetary policies fail to target persistently weak consumer demand. Finally, Libyan factions have reached a preliminary agreement to appoint a governor and deputy governor of the Central Bank, as per Bloomberg, potentially marking the first step towards Libyan crude oil exports increasing. 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 $1.29/bbl, respectively.

After this morning’s rally on the back of substantial monetary policy easing announcements in China, the Nov’24 Brent futures contract dipped over the course of this afternoon, trading at $75.51/bbl at 12:00 BST and declining to $74.90/bbl at 17:20 BST (time of writing). Price action has been volatile amid escalation of conflict in Lebanon and another hurricane threatening the US Gulf Coast. In the news today, as the Libyan political standoff continues to stall crude oil output, Libya’s exports have crashed to 400kb/d for this month compared to 1mb/d in August, according to ship-tracking data compiled by Reuters. Analytics from Kpler showed that most of these cargoes were headed to Italy and Greece, with some travelling to China and Canada. In other news, the US State Department and Global Affairs Canada are in negotiations over the maritime boundaries of the Beaufort Sea, according to Bloomberg. Overlapping between the Yukon, Northwest Territories, and the north of Alaska, the Beaufort Sea is thought to contain a potentially oil-rich seabed and is of particular importance as China and Russia seek to explore more resources and trade routes in the Arctic. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.68/bbl and $1.82/bbl, respectively.

After sideways price action this afternoon, Nov’24 Brent futures contract gradually fell from $74.69/bbl at 12:00 BST down to $73.16/bbl at 17:25 BST (time of writing). In the news today, China’s Russian oil imports have jumped 25.6% m/m in August as Beijing took advantage of cheaper crude prices, according to data from the Chinese General Customs Administration. Meanwhile, Chinese crude imports from Iraq rose by 43.1% m/m in August and imports from Saudi Arabia fell by 17%, as per data compiled by Russian news agency Interfax. In other news, after Israel’s defence minister announced this morning that attacks against Lebanon would escalate, aerial strikes have now killed at least 182 people, making it the deadliest day in nearly a year of conflict between Hezbollah and Israel. As the conflict worsens, the potential for Iran to become more involved in backing Hezbollah has stoked concerns of Iranian oil exports being disrupted. Finally, possible strikes at the end of the month by dockworkers at US East Coast and Gulf Coast ports could cause major delays in shipments. According to an Oxford Economics report, the strike could involve up to 45,000 workers at ports that account for roughly 60% of US shipping traffic. 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 $1.77/bbl, respectively.

The Nov’24 Brent futures price inched up this afternoon from $74.59/bbl at 12:00 BST to $74.76/bbl at 17:30 BST (time of writing). In the news today, Russia has boosted its use of sanctioned tankers to export oil, demonstrating the country’s continued success in defying US and EU restrictions. Six oil tankers sanctioned by the UK, EU, or US, loaded oil cargoes from Russia in August and September, as per data compiled by Bloomberg. Furthermore, at least 17 tankers, the majority owned by Sovcomflot, have been reported leaving Russian ports with crude oil since the end of April. In response, the US has asked at least one shipping insurer for information on 14 companies it suspects violated sanctions on Russian crude oil. In other news, India’s August crude oil imports rose 6.4% y/y to 19.9 million tons, up the most since May according to data published by the Indian oil ministry’s Petroleum Planning & Analysis Cell. Finally, TotalEnergies is set to develop $9 billion worth of oil resources in Suriname, reportedly ordering a hull for a 200 kb/d production vessel. Crude oil discoveries In Suriname have opened access to some 2.4 billion barrels in reserves, Wood Mackenzie analysts estimated. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.81/bbl and $2.14/bbl, respectively.